negotiate a trade in services agreement
Policy Factsheet Background The Trade in Services Agreement (TiSA) is a services-only trade agreement currently being negotiated between the U.S. and 49 other WTO–member countries, which account for 70% of the world’s trade in services. It represents the best opportunity in two decades to improve and expand global services trade. Negotiations began in early 2013. The U.S. is the largest exporter of services in the world.1 The services sector, which includes a diversity of industries ranging from consulting and financial services to architecture, engineering and IT, has grown faster than other major sectors for decades and accounts for 69% of U.S. GDP.2 In fact, the U.S. boasts an annual services trade surplus of over $213 billion.3 As the U.S. economy becomes increasingly services-based, our international competitiveness hinges on our commitment to investing in and growing our service exports. However, the current seventeen-year-old WTO services agreement, GATS (General Agreement on Trade in Services), does not effectively address many costly services trade barriers—leading to large unrealized gains from services trade. For example, while services account for over 60% of global production and employment, they only represent 20% of total trade, largely due to heavy market restrictions and barriers.1 TiSA could eliminate barriers such as restrictions on foreign investment or nationality requirements and strengthen rules for services trade, allowing U.S. businesses to more easily and affordably provide services across international borders. 1 World Trade Organization | 2 United States Trade Representative | 3 U.S. Department of Commerce, Economics and Statistics Administration, 2011
Trade in Services Agreement
Policy Factsheet Why it matters to
WASHINGTON Washington state stands to gain significantly if services trade is liberalized. Our state is the fifth largest exporter of services in the U.S. and exported $24.6 billion in services in 2012.4 The computer software and IT services sector led the way, exporting $13 billion.5 Other leading services exports include professional services like legal, finance and accounting, as well as international tourism, foreign student education and architecture services. These industries represent almost 43% of Washington’s GDP, but less than 27% of total state exports, which means that there are tremendous opportunities to increase trade by Washington state service providers.5
Gates Foundation health workers administer polio vaccines in Ghana
POLICY FAQs 1. What would a services trade agreement include? A comprehensive TiSA would build upon the achievements of the GATS, improving market access and creating new and enhanced services trade rules. The agreement would be comprehensive in scope with no exclusion of services sectors or modes of supply, and would eliminate barriers such as restrictions on foreign investments and nationality requirements. The agreement would also facilitate the movement of people who work as service providers and improve cross-border data flows. 2. How would services trade liberalization impact the computer software and IT industry? Intellectual property rights protection is a major concern for exporters in the computer software and IT services industry. Many emerging economies do not have strong IP enforcement mechanisms, which reduces revenues and poses a significant barrier to trade for software and IT companies. A potential TiSA could improve IP protection in the participating countries, increasing exports for software and IT companies. An agreement will also improve and expand cross-border data flows and increase transparency. 3. How is the research, global health and development sector related to a services agreement? Washington is home to one of the best research, global health and development sectors in the world. Organizations like PATH, World Vision and the Bill and Melinda Gates Foundation are global leaders in this space, along with dozens of additional local stakeholders – from Seattle BioMed and SightLife in Seattle to SIGN and the Paul G. Allen School for Global Animal Health at Washington State University in Eastern Washington. Nonprofit and public institutions are rarely included in estimates of trade-related employment, but global health and development fits the basic definition: it is a service performed by Washington employees for international clients that brings money and jobs into the state. 4. What countries would be included in TiSA? The current partners negotiating the agreement are the United States, the EU, Australia, Canada, Chile, Colombia, Costa Rica, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, South Korea, Switzerland, Taiwan and Turkey. 5. How would an agreement impact the financial and other professional services industries? Unlike other industries that move physical goods across borders, service industries rely on the movement of their employees to provide services across borders. An ideal services agreement would facilitate the crossborder flow of business professionals by eliminating costly visa wait times and restrictions. TiSA would also minimize regulatory constraints that place foreign firms at a disadvantage.
4 U.S. Chamber of Commerce, traderoots.org | 5 Washington Council on International Trade and Trade Development Alliance of Greater Seattle, “International Competitiveness Strategy for Washington State,� 2012
Policy recommendations An ideal international service agreement would: • Be comprehensive in scope and exclude no mode of supply or service sector; • Improve market access and lower barriers to entry such as nationality requirements and restrictions on foreign investment; • Remain relevant into the future by being flexible enough to address new issues arising in the global marketplace and changes in the way services are traded; • Ensure that data can cross borders freely under a consistent, transparent framework; • Level the playing field by ensuring state-owned enterprises (SOEs) operate solely on commercial terms.
Washington Council on International Trade www.wcit.org @WashingtonTrade 1301 Fifth Avenue, Suite 1500 Seattle, WA 98101