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Renewed efforts are needed to open markets as barriers to services trade remained high in 2023

by LLB staff reporter
12th Feb 24 1:58 pm

The supply of services through commercial presence and digital trade faced new barriers in 2023, as global services providers were confronted by fragmented regulatory environments, according to annual analysis from the OECD.

The overall number of services trade liberalisation reforms enacted in 2023 was below the previous year, but the aggregate impact of liberalising policies nonetheless moderately outweighed the introduction of new restrictions.

New liberalisation efforts in 2023 contributed to easing regulatory hurdles in some countries, notably as regards infrastructure-related services, such as construction, architecture, and engineering services.

These positive developments were offset, however, by a range of new barriers across several countries, including related to the screening of foreign direct investment affecting services sectors such as computer services, telecommunications, transport, and commercial banking.

Similarly, rules on cross-border data flows, digital trade and market entry for foreign e-commerce platforms were tightened, adding to the challenges faced by global services providers, according to the OECD.

OECD Services Trade Restrictiveness Index: Policy trends up to 2024 shows a slowdown in the adoption of new regulations affecting services trade between 2022-23, compared to changes observed in 2021-22, across the 22 major sectors covered.

The annual report, which covers services trade regulations in 50 countries, representing more than 80% of global services trade, shows Japan, Spain and the United Kingdom had the lowest regulatory barriers to services trade in 2023. China, Korea and Portugal are identified as having enacted the highest levels of services trade liberalising reforms last year.

Distribution, sound recording, and motion pictures services were the most open service sectors in 2023, while air transport services, legal services, and accounting and auditing services maintained the longstanding position as the most restrictive sectors, on average, across countries studied.

“With half of all jobs in services sectors, open and well-regulated service markets are essential to facilitate global economic growth. Yet services trade barriers remain high and progress on liberalisation is slow,” OECD Secretary-General Mathias Cormann said.

“More international cooperation is needed and the upcoming 13th WTO Ministerial Conference will be an opportunity to advance discussions on liberalisation of services trade policies, including on market access, and the implementation of good practices on services domestic regulations.”

Concerted and accelerated efforts to ease barriers to trade in services could substantially reduce trade costs for firms that provide services across borders and enhance productivity in manufacturing. Benefits accrue across all countries, with reduced trading costs most prominent in emerging market economies.

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