International trade in services
From Statistics Explained
- Data from July 2013. Most recent data: Further Eurostat information, Main tables and Database.
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 international trade broken down 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 and industry as a whole, 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 globalized world.
Main statistical findings
Considering EU-27 total value of exports of goods and services, the share of services exported (extra-EU) was relatively stable from 2001 to 2008, fluctuating between 27.9 % and 28.7 %. This share rose to 31.1 % in 2009, before falling to 29 % in 2010 and back to 28 % in 2011 and 2012. With regard to total value of goods and services imported by the EU-27, the share of services peaked at 26.4 % in 2002, after which four consecutive contractions followed. From a relative low 22.4 % in 2006, the share of imported services in the EU-27 remained considerably unchanged until 2009, when there was a substantial increase to 26.3 %. In 2011 the share of services imported fell again, attaining the lowest level (22.1 %) in a decade, after which a modest increase to 22.6 % in 2012 was recorded.
The EU-27 reported a surplus in services transactions of EUR 146 700 million with the rest of the world in 2012 (provisional), with exports amounting to EUR 657 400 million and imports to EUR 510 600 million (see Table 1).
In 2012 the United Kingdom recorded a surplus (extra and intra-EU combined) of EUR 81 500 million in service transactions, the largest value among the Member States and considerably more than the next highest levels that were recorded by Spain (EUR 37 100 million), France (EUR 30 300 million) and Luxembourg (EUR 23 100 million). In contrast, Germany recorded a deficit of EUR 19 900 million, by far the largest deficit among Member States. In 2012 for all the Member States international transactions of services accounted for 54.6% of exports and 58.5% of imports within the EU-27 (Tables 2 and 3).
The most recent annual figures on transactions with partners outside the EU-27 broken down by economic zones go back to 2011 (Figure 1). Northern America was the main extra-EU trading region for the EU-27’s international trade in services, accounting for 26.8 % of exports and 31.2 % of imports (see Tables 4 and 5). The EU-27’s largest net balances for services were recorded with EFTA, Asian and African countries (surpluses in excess of EUR 14 000 million in 2011). The EU-27 also posted a surplus with most of the other regions, although negative balances were recorded with central America (EUR 4 900 million) and northern Africa (EUR 2 000 million).
Table 6 provides similar information on the development of trade in services for a set of selected trading partners countries. It shows that the main trading partner for the EU-27 in 2012 (provisional data) was the United States, with exports and imports relatively balanced. The largest surplus for trade in services was recorded with Russia (EUR 13 100 million).
Regarding the breakdown by type of service, in 2012 more than two thirds of the EU-27’s exports (67.7 %) and imports (70.0 %) were accounted for by three categories: transport, travel and other business services (see Figure 2). The surplus of EUR 45 900 million for other business services was the highest, followed by surpluses of EUR 26 300 million for computer and information services, of EUR 25 900 million for financial services and of EUR 21 800 million for transport. Royalties and license fees (EUR 7 100 million) registered the only deficit.
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 for 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; extra-EU transactions which correspond to the transactions declared by EU Member States with countries outside the EU. World transactions are equal to the sum of intra-EU transactions and extra-EU transactions.
The breakdown of 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 economic wealth of the EU, and accounts for more than 50 % of GDP in each Member State. 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. Services are also often 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, thus allowing 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 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 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.
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
- OECD - Services trade
- United Nations Conference on Trade and Development (UNCTAD) - Manual on Statistics of International Trade in Services 2010 (MSITS 2010)
- Newsletter of the Interagency Task Force on Statistics of International Trade in Services