International trade in services
Data extracted in March 2020.
Planned article update: April 2021.
International trade in services with non-member countries (extra-EU), EU-27, 2013–2018
This article describes the major developments of international trade in services in the European Union (EU), and the EU Member States. Furthermore, it provides information about the EU’s main trading partners for services.
Services play an important role in all modern economies. A resilient tertiary service sector, as well as an increased availability of services, may boost economic growth and enhance industrial performance. In an increasingly globalised world, services such as finance, insurance, transport, logistics and communications deliver key intermediate inputs and thereby provide crucial support to the rest of the economy.
Figure 1 presents the development from 2000 to 2018 of the sum of exports and imports for the EU-27’s transactions of goods and services with non-member countries (in other words, trade outside of the EU, also known as extra-EU trade); these data are based on quarterly balance of payments statistics. During this period, the EU-27’s volume of services transactions with non-member countries grew each year with the exception of 2003 and notably 2009, the year in which the global financial and economic crisis was at its peak and the EU-27’s transactions in services fell by 8.3 %. From 2010 onwards, the combined exports and imports of services traded with non-member countries increased at a relatively rapid pace, with growth peaking at 15.9 % in 2015, reaching a growth of 2.2 % in 2018. The EU-27 net surplus of services, in other words the value of exports minus the value of imports, significantly increased between 2000 and 2018, reaching about EUR 150 billion in 2018. In the period 2012-2016, growth for the EU-27’s international trade in services was higher than for international trade in goods, with this trend reversing in 2017.
Over the period studied, from 2013 to 2018 the EU-27's exports of services to non-member countries increased every year, from EUR 695 billion in 2013 to EUR 969 billion in 2018. On the other hand, during the same period, EU-27 imports of services from non-member countries progressed from EUR 575 billion in 2013 to EUR 824 billion in 2018, resulting in the surplus for trade in services increasing from EUR 120 billion to EUR 145 billion (see Figure 2).
The 2018 data show that Germany was the EU Member State with the highest value of exports of services to non-member countries, its EUR 167 billion of exports equivalent to 17 % of the EU-27 total — see Figure 3. The next highest levels of exports to non-member countries were recorded in France (EUR 139 billion or 14 %), Ireland (EUR 127 billion or 13 % ) and the Netherlands (EUR 99 billion or 10 %). Germany also had the highest level of services imports from non-member countries, these being valued at EUR 156 billion or 19 % of the EU-27 total; Ireland (EUR 136 billion or 16 %), the Netherlands (EUR 120 billion or 15 %) and France (EUR 104 billion or 13 %) followed.
Figure 4 presents the analysis of trade in services between EU Member States (intra-EU trade) - rather than with non-member countries. Germany recorded the largest value of services exports to other EU Member States (EUR 124 billion or 14 %), followed by the Netherlands (EUR 111 billion or 12 %) and France (EUR 110 billion or 12 %). Again Germany was the largest importer of services from other EU Member States, with imports valued at EUR 155 billion or 18 %, ahead of France (EUR 121 billion or 14 %) and the Netherlands (EUR 88 billion or 10 %).
In 2018, the division of total trade in services (imports and exports combined) between trade with non-member countries on one hand and trade with other EU Member States on the other hand varied significantly among the EU Member States (see Figure 5). This reflected, to some extent, either the geographical proximity or historical trade associations. Hence, Ireland (72 %) displayed a large proportion of international services transactions occurring outside the EU, as did Cyprus (65 %) and Greece (62 %). For example, the services exchanged with the United States alone accounted for 26 % of all of Ireland’s transactions with non-member countries and 19 % of all of its transactions with the rest of the world.
At the other end of the spectrum, 77 % of Slovakia's international trade in services was recorded with other EU Member States, with this share also above or around three quarters for Slovenia, Austria and Romania. For 2018, the EU-27 average shows that about half of all international services transactions took place within the EU-27, and the other half were with non-member countries.
Main trading partners
Figure 6 presents the EU-27’s main trading partners for services. Between 2017 and 2018 the EU-27’s exports of services increased for all of its main partners except Switzerland and Russia for which they decreased slightly and Brazil and Norway for which they remained almost constant. In the same presiod, the EU-27's imports slightly increased for all main partners except Switzerland and Bermuda for which they descreased.
The relative importance of the EU-27’s main trading partners in 2018 was broadly similar to that in 2017. Figure 7 shows the share of the main partners for services exports and imports.
In 2018, the United Kingdom was the largest destination for EU-27 exports of services, with this trade valued at EUR 208 billion, representing 21 %) of all exports to non-member countries. The next largest destinations were the United States (19 %), Switzerland (11 %), and China (5 %) — see Figure 7. All the countries shown in Figure 7 collectively received 72 % of all exports of services from the EU-27 to non-member countries in 2018.
The top three countries of origin for EU-27 imports of services were the same as the destinations with the three highest shares of EU-27 exports of services — see Figure 7. This time the United States accounted for the largest value of imported services, some EUR 196 billion which was equivalent to 24 % of the total imports from non-member countries. The next highest shares were from the United Kingdom (20 %), and Switzerland (8 %). All the countries shown in Figure 7 collectively accounted for 72 % of all EU-27 services imported from non-member countries in 2018.
Source data for tables and graphs
Statistics on international trade in services provide the monetary value of such trade, with an analysis by the type of service (for example computer services or legal services) and by partner country. These statistics are produced from the transactions recorded under a country’s balance of payments, which captures all transactions that take place between an economy’s residents and non-residents. Furthermore, international trade in services statistics distinguishes between transactions between EU Member States (intra-EU transactions) and transactions with non-member countries (extra-EU transactions). The total includes international transactions with all countries of the world and comprises intra-EU and extra-EU transactions.
The main methodological references used for the production of statistics on international trade in services are the following:
- the International Monetary Fund’s (IMF’s) Balance of Payments and International Investment Position Manual (BPM6);
- the United Nations’ manual on statistics of international trade in services (MSITS 2010);
- the balance of payments services classification (EBOPS 2010).
The data presented in this article are based upon the BPM6 methodology which was adopted by the EU Member States from the 2013 reference year onwards. On a voluntary basis, some Member States have provided data according to the BPM6 methodology back to the 2010 reference year. In order to calculate the EU-27 aggregate for earlier years — using data provided according to the previous (BPM5) methodology — Eurostat estimated the missing values for those Member States where data prior to 2013 were not available.
EU-27 data for the total international trade in services for years before 2010 are available from the quarterly balance of payments. It should be noted that for the years for which data are available from both sources (quarterly balance of payments and annual international trade in services), the values for these two sources are somewhat different. The differences may be due to revisions in quarterly data, differences in coverage and possibly also to different compilation practices.
The provision of services contributes a substantial share of the EU’s economic wealth and accounts for more than 50 % of GDP in each of the EU Member States. Nevertheless, the value of exports and imports of goods is generally two to three times higher than that of services. Part of this imbalance may be due to the nature of some services, for example, professional services that are bound by distinct national legislation. Another difference between goods and services concerns the immediacy of the relationship between supplier and consumer: many services are non-transportable, in other words they require the physical proximity of the service provider and consumer, which implies that many services transactions involve factor mobility. For international trade in non-transportable services to take place, either the consumer must go to the service provider or the service provider must go to the consumer. Thus, an important feature of services is that they are provided via various modes of supply. Often services are tailored according to the client’s needs and wishes and so tend not to be homogeneous or mass-produced. As such, services cover a heterogeneous range of products and activities that are difficult to encapsulate within a simple definition, while services may also be difficult to separate from the goods with which they may be associated or bundled. International organisations increasingly recognise that there is a need to explore means of gathering further information as to how services are provided, thus perhaps enabling, in the future, better policy-making internationally and, at the same time, offering complementary information for the purposes of bilateral or multilateral negotiations in trade in services; some first steps have already been undertaken in this direction.
In parallel, some initiatives were initiated in order to provide answers to questions such as: who are the services traders, are service traders foreign-owned, and how many people do service traders employ? As such, a first set of experimental data on services trade by enterprise characteristics (STEC) have been collected. These try to measure international trade in services transactions by using data from different data sources. For example, this has been done by linking enterprise based data (from business registers) and data on services traders using a common identifier, namely the business register code. Data compilers involved in this experiment created a cross-classification in order to obtain new data which characterise the set of businesses involved in trade in services.
Despite the fact that the level of international trade in services in the EU is equivalent to one third of the equivalent level for goods, there are number of reasons to believe that the share of services may grow in future years. Technological developments have increased the tradability of some services, for example by simplifying web-based services in services such finance, education, health and government, among others. Furthermore, liberalisation efforts are likely to ease and therefore stimulate international trade in services. Globally, the inclusion of services in the Uruguay Round of trade negotiations led to the general agreement on trade in services (GATS) that entered into force in January 1995. The GATS aims to ensure increased transparency and predictability of relevant rules and regulations and to promote progressive liberalisation through successive rounds of negotiation.
Within the EU, the objective of Directive 2006/123/EC of 12 December 2006 on services in the internal market was to eliminate obstacles to trade in services. By doing so, the development of cross-border operations will be encouraged, making it easier for service businesses to set up or sell their services elsewhere in the EU. The Directive requires EU Member States to set up ‘points of single contact’ to assist business through the provision of information relating to offering services abroad. The Directive is intended to improve competitiveness, not just of service enterprises but also of EU businesses as a whole, while providing greater choice and improved quality for consumers. At the end of May 2012, the European Commission confirmed that all EU Member States had officially transposed the Services Directive into national law.
- All articles on balance of payments
- Balance of payments and international investment position manual (BPM6)
- EU international trade in transport services
- EU international trade in other business services
- Measuring international trade in services - from BPM5 to BPM6
- Services trade by enterprise characteristics - STEC
- Services trade statistics by modes of supply
- The EU in the world - international trade
- Balance of payments - international transactions (ESMS metadata file — bop_6_esms)
- International trade in services, geographical breakdown (ESMS metadata file — bop_its6_esms)