By APEC Group on Services
DETROIT, USA – Trade experts and stakeholder representatives urged APEC member economies to resolve barriers to services trade or stand to lose out both economically and socially.
Hailed as the new source of economic growth, the services sector has been drawing attention because of its prominence in most APEC economies. Its contribution to the economy and employment opportunities is so significant that APEC Leaders in 2016 instructed officials to develop a strategic roadmap with targets to achieved in 2025.
“Two years before the deadline, we are still not on target and need to push hard to ensure that we have a robust services environment to drive economic growth,” said Thomas Fine, the Convenor of the APEC Group on Services.
The APEC Services Competitiveness Roadmap (ASCR) sets out three overarching targets to be achieved by 2025:
(1) progressively reduce restrictions to services trade and investment, (2) increase the share of services exports from APEC economies in the total world services exports and (3) increase trade in services to exceed 6.8 percent and exceed the value-added of the services sector of the total GDP of the APEC region.
Watch: How Services Drive Economic Growth in the APEC Region
Commercial services trade in APEC fell to a record low in 2020 to US$3.7 trillion from US$4.7 trillion in 2019, according to the APEC Policy Support Unit (PSU). The PSU expected this number to be closer to the 2019 level now, but pointed out that APEC is well behind the target due to the disruptions caused by COVID-19 pandemic.
“Many factors could affect services trade and one critical factor is government policies,” said Andre Wirjo, an analyst with the PSU during a dialogue held in Detroit on 18-20 May. “Examples of these policies include restrictive measures affecting supply of services via commercial presence and movement of natural persons – all of which affected cross-border services trade,” he added.
Wirjo pointed out that early analysis shows that many economies have removed some of the temporary measures put in place during the pandemic, especially those targeted at people movement and travel. However, economies also introduced trade restrictions that are not related to COVID-19 between 2021 and 2022.
Participants at the dialogue heard views from expert from the Organisation for Economic Co-operation and Development (OECD) who stressed that creating an environment for services to thrive in the Asia-Pacific region will also allow growth to thrive globally.
“With the monitoring of services trade restrictions by both the PSU and OECD, it remains a cause for concern and what policymakers need to be mindful of is that you are missing opportunities for services policies to boost inclusive economic recovery,” said John Drummond, the OECD’s head of division of trade in services. The organization measures trade in services through their Services Trade Restrictiveness Index (STRI).
Drummond highlighted that policymakers could accelerate efforts to reduce barriers to essential services such as logistics, transportation, courier and distribution as well as to push ahead with trade facilitation reforms such as transparency, automation and the streamlining of border processes and border agency cooperation.
Experts also discussed how to make trade-in services more inclusive and equal to women, the role of structural reforms, as well as how the application of artificial intelligence can create opportunities and change the landscape of services at the same time. Enhancing the infrastructure and competitiveness of the telecommunication sector is also a priority.