International trade in services
From Statistics Explained
- Data from July 2014. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: July 2015.
This article provides information on international trade in services for the European Union (EU), the EU Member States, some EFTA and candidate countries, as well as Japan and the United States. It concentrates on the international transactions of services between the EU and its main trading partners, while it also presents an analysis of international trade by type of service.
Services play a major role in all modern economies: an efficient services sector is considered to be crucial for trade and economic growth and for dynamic and resilient economies. Services provide vital support to the economy as a whole and more specifically to industry, for example through finance, logistics and communications. Increased trade in services and the widespread availability of services may boost economic growth by improving the performance of other industries, since services can provide key intermediate inputs, especially in an increasingly interlinked and globalised world.
Main statistical findings
Relative to the value of all extra EU exports of goods and services from the EU (EU-27 until 2009, EU-28 from 2010), the share of services was relatively stable from 2001 to 2008, fluctuating between 27.9 % and 28.8 %. This share increased in 2009 to reach 31.1 %, fell to 29.1 % in 2010, dropped further to 28.2 % in 2011 and 2012, and then rose to 28.7 % in 2013. A similar analysis for extra EU imports shows that the share of services in total EU imports of goods and services peaked at 26.1 % in 2009, fell to 23.3 % in 2010 and dropped further to 21.9 % in 2011 — the lowest share in a decade — after which increases to 22.4 % in 2012 and 23.4 % in 2013 were recorded.
In 2013 (provisional figures), the EU-28’s international trade in services increased, with exports to the rest of the world rising by 3.4 %, from EUR 661.9 billion (= EUR 661 900 million) in 2012 to EUR 684.4 billion in 2013. EU-28 imports from the rest of the world grew by 0.5 %, from EUR 508.5 billion in 2012 to EUR 511.2 billion in 2013. As a result, there was a surplus of EUR 173.2 billion for EU-28 trade in services in 2013, compared with surpluses of EUR 71.3 billion in 2008 and EUR 153.4 billion in 2012 (see Table 1).
Among the EU Member States (for all transactions, both extra and intra EU-28), the United Kingdom recorded the largest surplus for international trade in services (EUR 89.0 billion), considerably more than the next highest levels recorded by Spain (EUR 40.9 billion), France (EUR 36.2 billion) and Luxembourg (EUR 23.9 billion). By contrast, among the EU-28 Member States, only Germany recorded a deficit for international trade in services (EUR 13.1 billion).
In 2013, intra EU transactions (trade with other EU Member States) accounted for the majority of the EU-28’s total international transactions in services: 55.2 % of exports and 59.7 % of imports. In transactions with other Member States, the largest surpluses for trade in services were recorded by Spain (EUR 28.0 billion), Luxembourg (EUR 20.1 billion) and France (EUR 14.7 billion), whereas deficits were registered in Germany (EUR -26.5 billion), Finland (EUR -3.3 billion), Italy (EUR -3.2 billion), Denmark (EUR -2.5 billion for 2012) and Slovakia (EUR -0.4 billion). Among the EU-28 Member States, Germany recorded the highest share of transactions in services with the other Member States, contributing 13.3 % of all intra EU exports and 18.3 % of all intra EU imports (see Table 2).
The United Kingdom was the largest exporter among the EU Member States for extra EU-28 international transactions in services. In 2013 it accounted for a 21.3 % share of exports leaving the EU for non-member countries. The United Kingdom recorded the highest surplus for international trade in services with extra EU-28 partners (EUR 78.8 billion), followed by France (EUR 21.6 billion) and Germany (EUR 13.4 billion). Ireland was the only EU Member State that recorded a deficit (EUR 3.6 billion) for extra EU-28 transactions in services, although the Czech Republic’s extra EU trade position for services was balanced (see Table 3).
The most recent annual figures on international transactions in services with partners outside the EU-28 (extra EU transactions) analysed by economic zone are available for 2012. Northern America was the main extra EU trading region for the EU, accounting for 27.5 % of the EU-28’s exports and 31.7 % of its imports; transactions with Asian countries, including China, Hong Kong, India and Japan (but excluding the Arabian Gulf), amounted to approximately 20 % of the total for both exports and imports, followed by transactions with the European Free Trade Association (EFTA), 16.0 % of exports and 14.6 % of imports (see Figure 1). The latest figures available (for 2012) show that OECD countries (including 21 of the EU Member States that are also OECD members) accounted for 78.0 % of total exports and 80.0 % of total imports by EU-28 Member States (see Tables 4 and 5).
In 2013, the main trading partner (a single country) outside the EU for the export of services by the EU-28 Member States was the United States (EUR 161 billion, representing 10.5 % of EU-28 services exports — intra and extra EU transactions combined), followed by Switzerland (EUR 83 billion, 5.4 % of all services exports), China (EUR 32 billion, 2.1 %), Russia (EUR 29 billion, 1.9 %) and Japan (EUR 23 billion, 1.5 %) — see Table 4.
Concerning imports of services in 2013, the main partners outside the EU were also the United States (EUR 148 billion, accounting for 11.7 % of all services imports — intra and extra EU transactions combined), Switzerland (EUR 62 billion, 4.9 % of all services imports), China (EUR 21 billion, 1.6 %), Russia and Japan (both EUR 14 billion, 1.1 %) — see Table 5.
Table 6 provides similar information on the development of international trade in services for the EU’s main extra EU partners. In 2013, the EU-28’s largest surpluses for trade in services were recorded with Russia (EUR 14.7 billion), the United States (EUR 12.4 billion), China (EUR 11.7 billion), Japan (EU 9.2 billion), Brazil (EUR 7.7 billion) and Canada (EUR 6.4 billion).
Regarding transactions for the different service categories, one third of the EU-28’s extra EU exports and imports in 2013 were accounted for by other business services — which covers miscellaneous business, professional and technical services — this category contributed EUR 219 billion of EU-28 extra EU exports and EUR 146 billion of EU-28 extra EU imports. It was followed by transport (EUR 140 billion of exports and EUR 116 billion of imports), travel (EUR 101 billion of exports and EUR 87 billion of imports) and financial services (EUR 59 billion of exports and EUR 23 billion of imports). The highest surpluses for the EU-28’s extra EU trade in services were recorded for other business services (EUR 73 billion), financial services (EUR 36 billion), computer and information services (EUR 27 billion) and transport (EUR 24 billion). The only extra EU deficit (EUR 9 billion) was registered for royalties and license fees (see Figure 2).
Data sources and availability
The main methodological references used for the production of statistics on international trade in services are the International Monetary Fund (IMF)’s fifth balance of payments manual (BPM5) and the United Nations’ manual on statistics of international trade in services. The sixth edition of the balance of payments manual (BPM6) was finalised in December 2008 with implementation planned during the course of 2014.
International trade in services is geographically allocated according to the residence of the trading partner, distinguishing between: intra EU transactions which correspond to the sum of transactions declared by EU Member States with other EU Member States and extra EU transactions which correspond to the transactions declared by EU Member States with countries outside the EU. Total (world) transactions are equal to the sum of intra EU transactions and extra EU transactions. Note that the data for 2008 and 2009 refer to the EU-27 aggregate, whereas data from 2010 onwards relate to the EU-28 aggregate.
The analysis presented in this article for Eurostat statistics on international trade in services includes three main sub-items: transport, travel, and other services.
- Transport covers all transport services that are provided by residents of one economy for those of another and that involve the carriage of passengers, the movement of goods (freight), rentals (charters) of carriers with crew, and related supporting and auxiliary services. All modes of transport are considered including sea, air, space, rail, road, inland waterway, and pipelines, as are other supporting and auxiliary services (such as storage and warehousing).
- Travel covers primarily the goods and services acquired from an economy by travellers during visits of less than one year to that economy. The goods and services are purchased by, or on behalf of, the traveller or provided, without a quid pro quo (that is, are provided as a gift), for the traveller to use or give away. The transportation of travellers within the economies that they are visiting, where such transportation is provided by carriers not resident in the particular economy being visited, as well as the international carriage of travellers are excluded; both are covered in passenger services under transport. Also excluded are goods purchased by a traveller for resale in the traveller’s own economy or in any other economy. Travel is divided in two subcomponents: business travel and personal travel.
- Other services comprise external transactions not covered under transport or travel, specifically: communications services, construction services, insurance services, financial services, computer and information services, royalties and licence fees, other business services, personal, cultural and recreational services, and government services.
The provision of services contributes an increasing share of the EU’s economic wealth, and accounts for more than 50 % of GDP in each of its Member States. Nevertheless, the value of exports and imports of goods is generally two to three times higher than that of services. Part of this imbalance may be due to the nature of some services: for example, professional services that are bound by distinct national legislation. Another difference between goods and services concerns the immediacy of the relationship between supplier and consumer. Many services are non-transportable, in other words, they require the physical proximity of the service provider and consumer. This proximity requirement implies that many services transactions involve factor mobility. Thus, an important feature of services is that they are provided via various modes of supply. Often services are tailored according to the client’s needs and tastes and hence tend not to be homogeneous or mass-produced. For international trade in non-transportable services to take place, either the consumer must go to the service provider or the service provider must go to the consumer. As such, services cover a heterogeneous range of products and activities that are difficult to encapsulate within a simple definition, while services may also be difficult to separate from goods with which they may be associated or bundled.
Despite the relatively low level of international trade in services, there are a number of reasons to believe that this level may grow in future years. Technological developments have increased the tradability of some services, for example facilitating web-based services such as those for finance, education, health and government among others. Furthermore, liberalisation efforts are likely to facilitate and therefore stimulate international trade in services. Globally, the inclusion of services in the Uruguay Round of trade negotiations led to the general agreement on trade in services (GATS) that entered into force in January 1995. The GATS aims at ensuring increased transparency and predictability of relevant rules and regulations, and promoting progressive liberalisation through successive rounds of negotiation.
Within the EU, the objective of the Services Directive 2006/123/EC of 12 December 2006 on services in the internal market is to eliminate obstacles to trade in services. This allows the development of cross-border operations, making it easier for service businesses to set up or sell their services elsewhere in the EU. The Directive requires EU Member States to set up ‘points of single contact’ to assist business through the provision of information relating to offering services abroad. The Directive is intended to improve competitiveness, not just of service enterprises but also of EU business as a whole, while providing greater choice and improved quality for consumers.
At the end of May 2012, the European Commission confirmed that all EU Member States had officially transposed the Services Directive into national law. Following Article 41 of the Directive (which calls for a comprehensive report on the application of the Directive), the European Commission released on 8 June 2012 a Communication titled ‘A partnership for new growth in services 2012-2015’ (COM(2012) 261 final). The Communication formed part of a wider ‘services package’: a set of proposals designed to stimulate growth and release the full potential of the services market.
- Balance of payments and international investment position manual (BPM6)
- Balance of payment statistics
- International trade introduced
- Measuring international trade in services - from BPM5 to BPM6
- The EU in the world - international trade
Further Eurostat information
- European Union international trade in services – analytical aspects – data 1997-2005
- Methodological soundness questionnaire – report on responses to the Eurostat-OECD questionnaire on the measurement of trade in services in the balance of payments
- International trade in services, geographical breakdown (t_bop_its)
- International trade in services, geographical breakdown (bop_its)
Methodology / Metadata
- Balance of payments - international transactions (ESMS metadata file — bop_esms)
- International trade in services, geographical breakdown (ESMS metadata file — bop_its_esms)
Source data for tables and figures (MS Excel)
- European Commission - Trade
- International Monetary Fund (IMF) - International Trade in Services: Recent Methodological Developments
- Newsletter of the Interagency Task Force on Statistics of International Trade in Services
- OECD - Services trade
- United Nations Conference on Trade and Development (UNCTAD) - Manual on Statistics of International Trade in Services 2010 (MSITS 2010)