Goods and services
Goods and services produced in the EU are traded around the globe but their trade can be affected by various aspects of trade policy, such as import tariffs, regulation or discrimination against foreign suppliers.
When is a product a good or a service?
Goods and services are increasingly linked together. Having access to services is a prerequisite for economic performance of many manufactured products.
For example, producers and exporters of textiles, cars or computers cannot be competitive without access to efficient banking, insurance, accountancy, telecom or transport system. And the purchase of many products nowadays often comes with a service component.
The rise of cloud computing means that technical infrastructure, platforms and software are increasingly provided as services on a global basis. What used to be hardware installed at the premises of a company is becoming a service provided cross-border, demonstrating how services can substitute goods in certain cases.
Why is it relevant?
- The EU is the world's biggest exporter of manufactured goods, and is a global market leader for high-quality products.
- The EU economy is already one of the most open to trade: EU import tariffs for industrial products are among the lowest in the world.
- Imports from many of the EU's suppliers of industrial products enter the EU at reduced rates under the terms of bilateral agreements or other import duty suspensions like the Generalised Scheme of Preference.
- The significance of non-tariff barriers to trade such as technical barriers to trade or sanitary and phytosanitary measures has increased considerably over the past years, as tariffs steadily decline and governments worldwide introduce more and more regulatory requirements to address inter alia health, safety or environmental concerns.
- The way a product is treated on import is linked to its country of origin. But globalisation has meant that many different countries are involved in manufacturing, so determining where the goods come from means setting clear rules of origin.
- The services sector contributes more to economic growth and job-creation in the EU than any other sector. The services sector accounts for some three-quarters of the gross domestic product for the EU. Additionally, over three-quarters of EU jobs are in the services sector. No country can prosper today without an efficient service infrastructure.
The EU's market access strategy
The European Commission works in close cooperation with Member States and business through the Market Access Strategy to make sure that trade opportunities created through multilateral and bilateral negotiations are translated into real market access for European exporters. It consists of two instruments:
1. The Market Access Partnership is designed to identify and remove the specific obstacles that EU companies face in foreign markets. The European Commission closely cooperates with Member States and business to that end.
The Partnership is made up of:
- The Market Access Advisory Committee which brings together the Commission, Member States and business representatives once per month in Brussels to exchange information and develop strategies on how to remove barriers. This is a sort of steering committee for the Market Access Strategy.
- The Working Groups examine trade barriers in specific sectors. They pool the technical expertise of representatives from the Commission, Member States and business and meet on an ad hoc basis in Brussels.
- The Market Access Teams managed by EU delegations in non-EU countries gather local expertise to identify and tackle trade barriers.
This Market Access Partnership has already delivered a number of success stories, lifting barriers in many countries.
2. The Market Access Database is an interactive, free online service with information for more than 100 countries on:
- import tariff and internal taxes,
- import formalities (e.g. customs procedures and requirements) with samples of all the necessary forms, and
- the most important trade barriers faced by EU exporters abroad.
The Market Access Strategy pays particular attention to the needs of SMEs who want to export to or invest in third countries.
EU trade policy on goods and services
Multilateral and plurilateral negotiations on goods and services:
Through the Doha round, the EU is aiming to improve the conditions for goods and services’ trade around the world by reducing import tariffs, removing non-tariff barriers as far as possible and improving the commitments to freer trade in services.
The EU has proposed to reduce tariff protection world-wide by applying a formula for tariff reduction and by selecting certain sectors for full tariff elimination. However, so far no agreement has been found in WTO, partly because of disagreement on the contribution emerging countries would have to make to tariff reduction.
Certain WTO Members including the EU have joined the Information Technology Agreement (ITA) which provides duty free access to IT products, including computers, telephones and inputs and components such as semiconductors.
- The ITA supported the development and progress in this sector, which lead to a quadrupling of the trade in information technology products.
- 15 years after the ITA was signed, many products have become obsolete, while new products have emerged. Entire sectors have become digitalised, such as medical devices and other sophisticated instruments.
- Therefore Members of the ITA have started to discuss expanding product expansion.
- The EU and other Members would like to address Non-Tariff Barriers (NTBs) in the area of information technology.
In addition, the European Commission has asked the Council to give its green light for negotiations on a new plurilateral agreement on trade in services. To begin with, 21 WTO Members will be at the negotiating table, but the EU is keen to encourage others to join. The EU is also pushing for the agreement to dovetail with WTO rules so it can be later folded into the WTO system.
Bilateral negotiations on goods and services
A number of the EU's bilateral trade agreements have included a significant liberalisation of trade in goods as well as provisions covering non-tariff barriers and trade in services. For example:
- The EU and Mexico's Economic Partnership, Political Coordination and Cooperation Agreement opens up trade in both goods and services.
- The Association Agreement between the EU and Chile creates a free trade area in goods and services
- The EU-South Korea Free Trade Agreement eliminates tariffs with only a limited number of agricultural products are excluded from tariff elimination. The agreement also breaks new ground in addressing non-tariff barriers to trade.
- The EU's Trade agreement with Peru and Colombia will open up goods and services markets on both sides
- The Association Agreement between the EU and Central America improves access to goods and services markets as well as better conditions for trade through new disciplines on non-tariff barriers
- The EU-Singapore Free Agreement, once implemented, will create new opportunities in many services sectors such as in banking, insurance and other financial services industries. The deal will facilitate the access of industrial and agricultural products on to an important export market and trade hub in South-East Asia, through greater recognition of EU standards.
The way forward on goods and services
The EU continues to negotiate ambitious provisions to improve access to goods and services markets with several regions and countries including:
- Gulf Cooperation Council
The EU also seeks to conclude Economic Partnership Agreements with African, Caribbean and Pacific (ACP) countries.
More on goods and services
- The General Agreement on Tariffs and Trade is a WTO Agreement that reduces import tariffs on trade in goods around the world.
- The WTO's General Agreement on Trade in Services aims at ensuring increased transparency and predictability of relevant rules and regulations, and promoting progressive liberalisation of international trade in services through successive rounds of negotiation.
- Factsheet on santiary and phytosanitary measures
- Factsheet on technical barriers to trade