Eric Davies reports on two recent European Union initiatives aimed at promoting trade in services.

The service sector has leapt up the EU trade agenda in recent months, as two key initiatives have gained momentum. The first concerns giving preferential treatment to services exports from the world’s Least Developed Countries (LDCs), while the second sees the EU pushing for progress in specific areas during the latest round of negotiations for an international agreement on trade in services (TiSA).

Easier access for LDCs

In mid-November, the EU notified the World Trade Organization (WTO) that it would immediately start making it easier for services exported from the world's Least Developed Countries to access the European market, by granting them preferential treatment.

The EU move was a direct response to the 2011 LDCs Services Waiver, adopted by the WTO in Bali. The waiver authorised WTO Members to grant preferential treatment to services and service suppliers from the LDCs.

In some 30 or sectors and subsectors, preferential treatment will enable the LDCs to transfer management trainees to affiliated companies in the EU, where they will be allowed to accrue up to 12 months experience.

LDC companies with a contract to provide services in the EU will be able to send skilled professionals to Europe to provide the services, and independent professionals from LDCs will be able to provide services in the EU for up to six months at a time in a wide range of services sectors.

Those sectors include: architecture, engineering, research and development, management consulting, and computer services. Commenting on the announcement, EU Trade Commissioner Cecilia Malmström emphasised that the EU attaches great importance to helping LDCs better integrate into the world trading system. “I hope that this will encourage all developed and developing WTO Members, who have not yet given preferential treatment to these countries, to do so without delay” she said, adding that the waiver is an important deliverable of the Doha Development Agenda.

Among the other countries that have notified the WTO that they will apply the Waiver are Australia, Canada, China, India, Japan and the United States.

EU pushes TiSA talks

During the latest round of TiSA negotiations, the EU intended to use its role as chair to push for major progress in key areas: domestic regulation, transparency in legislative processes, and financial services.

The Trade in Services Agreement is currently being negotiated by 23 WTO members, including the EU. Between them, the participating countries (including the EU’s 28 Member States) account for more than 70% of world trade in services.

The aim of TiSA is to open up markets and improve rules in areas such as licensing, financial services, telecoms, e-commerce, maritime transport, and professionals moving abroad temporarily to provide services.

This is a significant issue for the EU, which is the world's largest exporter of services. Trade in services amounts to three quarters of EU gross domestic product (GDP) and supports millions of jobs, while cross-border trade in services accounts for nearly a third of intra-EU trade.

By making it easier for EU firms to export services to other countries, the Union aims to increase the potential for securing growth and jobs in Europe. Increased choice and lower prices for both businesses and consumers should also result from an agreement that makes it possible for firms from outside Europe to offer their services in the EU.

TiSA negotiations do not fall under the remit of the WTO. However, by making sure that it is compatible with the General Agreement on Trade in Services (GATS), which involves all WTO members, TiSA will be open to other WTO members in the future.

The Commission’s DG Trade has compiled a useful Q&A on TiSA.

Last reviewed 4 January 2016