Members discuss improvements to service exports data in LDCs, COVID-19, WTO reform
WTO members explored the impact of COVID-19 on trade in health services and improvements in service exports data in least-developed countries (LDCs) at two events on 4 and 5 October organized under the Council for Trade in Services. At a Council meeting on 3 October, they discussed implementation issues from the 12th Ministerial Conference (MC12), including the LDC Services Waiver and e-commerce, and ways of improving the functioning of services bodies in the WTO.
In the Council meeting, members also continued reviewing exemptions to the WTO’s most-favoured nation principle and considered various concerns raised by members regarding the impact of certain measures, such as cybersecurity measures, on services trade.
Health-related services in the wake of COVID-19
WTO members discussed the implications of the COVID-19 pandemic for trade in health-related services in an experience-sharing session on 4 October. This was undertaken as part of the WTO response to pandemics, which was mandated by ministers at MC12 last year.
The WTO Secretariat outlined that the travel and border restrictions imposed during the pandemic put severe pressure on health-related services traded through so-called “mode 2” (consumers or firms purchasing a service in another country) and “mode 4” (individuals travelling from their own country to supply services in another). Globally, these ways of trading services fell by 58 and 39 per cent respectively between 2019 and 2020. Health-related services traded under “mode 1” (services supplied from one country to another), however, grew by 14 per cent in 2020.
Before the pandemic, health-related services trade grew on average by 7 per cent annually, almost double that of other services, as a result of poorer countries’ GDP catching up with the levels in richer countries, ageing populations and increasing digitalization, among other factors.
The event highlighted challenges faced by economies during the pandemic. These included shortage of essential workers, lack of digital infrastructure and problems with data connectivity. The urgency in developing mechanisms for rapidly responding to disease outbreaks and strengthening health systems was also highlighted.
Despite these challenges, COVID-19 led to increased use of digital technologies, such as the roll-out of online provision of health services, online training programmes related to COVID-19 testing, and vaccine development and delivery.
The event underscored a need for better preparation in the event of future pandemics, notably by adopting regulatory frameworks that promote the deployment of novel health solutions, facilitate the movement of essential health personnel in emergency situations, and foster the resilience of the health workforce and infrastructure. It also highlighted the importance of investing in health-related services, scaling up global cooperation and maintaining trade flows.
Improving LDCs’ service exports data
WTO members discussed improving LDCs’ service exports data in a workshop held on 5 October. The event brought together speakers from LDCs and other members.
The WTO Secretariat said that after declining during the pandemic, services trade recovered in 2022, reaching a total of USD 6.78 trillion. This represents a 15 per cent increase on an annual basis, and is 11 per cent above pre-pandemic levels. While trade in transport rose 25 per cent in 2022, shipping rates have declined steadily since May 2022. This reflected in part the return to consumers’ previous spending on services and the global economic and geopolitical context. Other services sectors recorded slower growth in 2022. However, this could be explained by the strong appreciation of the US dollar against major currencies.
LDCs’ services had been rising more quickly than in the rest of the world before the pandemic, mainly due to tourism. However, a lingering effect of the pandemic remains for LDCs. Their services exports were up by 27 per cent in 2022 but remained subdued, at 14 per cent below 2019 levels.
Among the challenges reported by LDCs speaking at the workshop were the high cost of surveys and their coverage, the difficulty in capturing services data, the lack of awareness of services-related terms by survey respondents, staff turnover, and the use of different definitions by services compilers and services trade negotiators.
The Common Market for Eastern and Southern Africa, which includes 13 LDCs among its 21 member states, stressed the need to mobilize resources to design surveys that capture services exports through modes 1, 2 and 4, including on digitally delivered services, on a bilateral basis, and the need to compile and disseminate services trade data.
Speakers from other WTO members shared their experiences in measuring services exports in various sectors, bilaterally as well as on digitally delivered services, services trade by mode of supply and by firm characteristics. Possible solutions to some of the challenges faced by LDCs include the digitalization of surveys to streamline processes, and initiatives to raise private sector awareness of the importance of trade in services statistics and to build public-private sector alliances. Other solutions include the establishment of robust IT systems for data validation, and closer data sharing arrangements by various agencies at national, regional and international levels.
Representatives from the International Monetary Fund, the United Nations Conference on Trade and Development, the United Nations Statistics Division, the World Bank and the WTO explored possible ways forward to improve service exports data in LDCs. The panellists called for the allocation of dedicated funds to services sectors that present export growth opportunities, such as digitally delivered services, and the production of statistics by partner country and by mode of supply. This would help to assess the impact of preferences notified by WTO members under the LDC Services Waiver (see below). Other suggestions were to enhance inter-agency cooperation and capacity-building and to integrate business and trade statistics.
Implementing MC12 mandates
LDC Services Waiver
In the Council meeting, the WTO LDC Group said that it has set up a questionnaire to gather information on the activities of LDC services suppliers and consumers in preference-providing members’ markets. It underlined the importance of implementing the MC12 Outcome Document’s paragraph 8, which instructs the Council “to review and promote the operationalization of the waiver”.
A total of 51 members have notified preferences for LDC services and service suppliers under the Services Waiver. The waiver was formalized by a decision adopted at the 2011 Ministerial Conference.
The Council discussed a compilation of members’ suggestions on how to improve the functioning of services bodies in the WTO and a new communication by the United Kingdom on this issue. Building on previous suggestions from the LDC Group, the objectives of the paper are to revitalise discussions on services at the WTO in an inclusive manner and maximise efficiency, the UK noted.
Among the UK’s suggestions are to adopt an e-Agenda, promote substantive deliberations on trade in services issues and facilitate the engagement of external stakeholders. “Ahead of MC13, the UK calls on all members to consider creative, inclusive, and practical ways to widen and deepen the trade in services agenda,” the communication states.
As part of the pandemic response exchanges, members discussed a new submission by India on trade-related measures it has taken in response to the COVID-19 pandemic. While some members noted the importance of discussing these topics in the aftermath of the crisis, others questioned the relevance of the WTO’s General Agreement on Trade in Services (GATS) to some of the issues raised.
E-commerce Work Programme
Members discussed a new communication by the WTO’s African Group entitled “The role of transfer of technology in resilience building: Work Programme on Electronic Commerce”, which suggests a discussion on how technology transfer can assist in bridging the digital divide, the WTO contribution to this process and how to balance the accessibility to source code with a secure and transparent technology environment. Some members pointed out that technology transfer depends on multiple factors, such as intellectual property frameworks, infrastructure and regulatory frameworks.
A few members provided information on their domestic training and capacity-building initiatives.
Highlighting the importance of collating more data on digital trade, reference was made to the July launch of the second edition of the Handbook on Measuring Digital Trade by the Organisation for Economic Co-operation and Development, the WTO, the United Nations Conference on Trade and Development and the International Monetary Fund.
Exemptions to WTO MFN principle
Members continued reviewing each other’s exemptions to the Most-Favoured Nation (MFN) principle, under which governments are normally prevented from discriminating between WTO members. The purpose of the review is to examine whether the conditions creating the need for the exemptions still exist. Highlighting the importance of engaging in the review, some members stressed the importance of eventually reducing exemptions that are currently in place.
Services trade concerns
Members discussed four specific trade concerns previously addressed in the Council involving cybersecurity measures and 5G-related measures, among other services-related topics.
Japan and the United States, supported by several other members, reiterated concerns about the cybersecurity measures of China and Viet Nam. China recalled its concerns about Australia’s 5G measures and repeated concerns with certain measures of the United States. China also reiterated its concerns regarding India’s measures in relation to mobile applications.
Many members took the floor to condemn the war in Ukraine and Russia’s actions. The Russian delegate responded by saying that the WTO was not the proper venue for a discussion of this nature.