How Regulations and Policies Can Contribute to Trade Growth in Services

The report from the World Trade Organization and World Bank was crafted by Hinrich Foundation into a “How to Use It” guide useful and practical for foreign journalists.

The importance of services, including trade in services, to economic growth throughout the world and in every economy cannot be understated. A recent report from the World Trade Organization (WTO) and World Bank Group identifies and emphasizes the importance of services to global trade, how regulations and policies can contribute to the growth of trade in services, and how economies can develop through trade in services.

To delve deeper into this topic, AFPC-USA turned to insights provided by Holly Smith, a consultant who is also a frequent contributor of trade and investment analyses to the Hinrich Foundation, a Singapore-based non-profit dedicated to promoting sustainable global trade.

Holly Smith

Smith created a guide based on and citing to the underlying WTO/World Bank Trade in Services for Development: Fostering Sustainable Growth and Economic Diversification report.

Smith is a consultant in Hong Kong advising on trade and investment policy developments. From 2009 to 2015, she served in the Office of the United States Trade Representative (USTR) as a Director for Intellectual Property and Innovation, a Director for China Affairs, and a senior policy advisor to the Deputy U.S. Trade Representative.

At USTR, Smith led the formulation of U.S. trade policy towards China, Hong Kong, Korea, India, Pakistan, and Thailand on issues related to intellectual property and innovation. She also assisted the Deputy U.S. Trade Representative in developing trade and investment policy towards Asia and sub-Saharan Africa, including overseeing Trans-Pacific Partnership (TPP) negotiations. From 2009 to 2011, she was responsible for coordinating the Joint Commission on Commerce and Trade talks between the US and China. Earlier, Smith worked as a lawyer in Beijing and Hong Kong, focused on trade and capital markets.

This conversation has been condensed and edited for clarity.

How do we define services? Could you give us some examples?

The Trade in Services for Development report lists services sectors and sub sectors citing the GATT Services Sectoral Classification List (see p. 9, Figure 1).  Common examples of services we encounter every day are food preparation and service in a restaurant, receiving a haircut from a barber, getting technical assistance from an IT specialist, and buying plane tickets from a travel agent. 

Why is this report important to trade and also to the public?

Although services generate more than two-thirds of global GDP (p. 2), many policymakers continue to prioritize manufacturing and trade in goods over promotion and liberalization of trade in services. This report makes an important contribution in making clear the vital role that services play in economic growth, and their increasingly important role in global trade, as well as their contributions to economic development around the world.

Hinrich Foundation

Beyond this, when the public thinks of trade they often think of goods or foodstuffs crossing borders, even though half of all employment globally is in services and many services are traded across borders.  This leads to too much emphasis, in my view, on trade policy toward goods (manufacturing) and agriculture and too little focus on services, and skews trade policies unhelpfully in some cases. At a minimum this report is helpful in showing the world how much economic activity derives from services.

Is it accurate to say that services generate more jobs than industry sectors like agriculture for example? What is the impact of services in different economies and in groups such as women and youths?

I refer you to pages 16-19 (Figures 3-5) of the report, which uses data from the International Labor Organization (ILO). The WTO and World Bank's analysis finds that depending on an economy's income level, 31-75% of the working population is engaged in services.  It is important to point out that in lower middle-income economies, industrial and agricultural jobs are still slightly in the majority and in low income economies, agriculture still accounts for a majority of employment. That said, the share of services employment in those economies is growing too.  Services employment for women and youth is growing significantly over time; women are overwhelmingly employed in services in the high-income world; in lower income countries services employment for women is less but growing.

Where can foreign journalists find more information about the guide of how to use the WTO and World Bank report on Trade in Services for Development?

I am happy to answer questions about the “How to Use It” guide but would refer them to the authors of the Trade in Services for Development report or the report’s very comprehensive bibliography on pages 97-101.