“This is an important and positive step that will simplify the international trade of services and has an immense symbolic character. Among the 67 member countries are major industrial nations such as the EU, USA, UK, and Japan, but also important emerging economies such as China, Brazil, Thailand, and Nigeria. The new rules will make it easier for, e.g., lawyers, architects, IT consultants, or other services providers to offer their services abroad. In addition, the initiative shows that agreements at WTO level are still possible.
Trade in services currently accounts for around a quarter of total world trade—and the trend is upwards, even if trade in services declined sharply last year due to the Covid19 crisis. The agreement is basically aimed at reducing domestic bureaucratic hurdles in the admission of foreign service providers. For example, it deals with rules regarding qualification and licensing requirements for providers from abroad. Trade in services is mainly restricted by such barriers, so the planned liberalization can be expected to have a strong positive impact on trade.
The WTO estimates that the implementation of these measures could save around USD 150 billion per year in trade costs, which would greatly boost services trade. So, overall, this initiative can be seen as very positive. Of course, liberalization also means greater competition in the domestic market, as regulations are dismantled and new providers enter the market. Not all domestic service providers may be happy about this.
Importantly, the symbolic character of the new agreement should not be underestimated. The Doha Round (in which far-reaching trade facilitation was to be negotiated) has been halted since 2001, and the WTO has been struggling with all kinds of problems, not just since former US President Trump took office. The cancellation at short notice of the ministerial conference scheduled for late November certainly did not help. That is why this agreementeven if not signed by all WTO member countries—is a very important symbol: It shows that, not only can negotiations still take place in the WTO, but that agreements can also be reached in these negotiations. And this will advance world trade and thus also the further development of the global economy.”