International trade in services by type of service


Data extracted in May-June 2017

Planned article update: June 2019

Highlights

Between 2010 and 2016, a growing share of the EU’s trade in services was accounted for by other business services, charges for the use of intellectual property, and telecommunications, computer and information services.

In 2015, the US was the EU’s main trading partner for transport services, with 22 % of the EU’s exports to non-member countries and 19 % of imports, followed by Switzerland (13 % of exports and 7 % of imports) and China (6 % of exports and 8 % of imports).

Principal extra-EU trade partners for transport services, EU-28, 2010 and 2015
(% of extra-EU total)
Source: Eurostat (bop_its6_det)

Globalisation patterns in EU trade and investment is an online Eurostat publication presenting a summary of recent European Union (EU) statistics on economic aspects of globalisation, focusing on patterns of EU trade and investment.

This article examines in more detail developments for international trade in services by type of service. While some services — like transport — have existed as long as there has been commercial activity, trade for many other services has developed relatively recently as a result of market liberalisation and the introduction of new information and communication technologies; these changes often eliminated a range of obstacles and provided new means for supplying services remotely. These changes have seen some services witness considerable structural changes, as small and medium-sized enterprises (SMEs) have been replaced by much larger, international enterprises. Illustrations include the retail sector (for example, food and beverages or clothing), accommodation services (for example, global hotel chains) or financial services (for example, retail banks or insurance companies), where it is relatively commonplace to find increased levels of concentration as multinational enterprises expand their operations.

Part of the change in the structure and composition of international trade in services may be attributed to a similar pattern of development to that witnessed previously for manufacturing, insofar as a range of (business) services have been outsourced to lower costs centres, for example, computer programming or call centres to service providers in countries like India. By contrast, the delivery of high value, bespoke services, such as those provided by architects, lawyers or management consultants has generally remained close to the point of delivery, reflecting among other issues continued barriers to entry in some professional services and the perceived need to develop and maintain face-to-face business contacts.

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International trade in services — overall developments

In 2016, other business services accounted for the highest share of EU-28 trade in services

In 2016, the highest values of EU-28 international trade in services — as measured by the sum of exports and imports to/from non-member countries — were recorded for: other business services (this diverse category includes, among others, services in the areas of research and development (R & D), professional and management consultancy, technical and trade-related services, architectural, engineering and scientific services, security and investigative services, real estate and other services to businesses); transport services; travel services; charges for the use of intellectual property (for example, royalties and licences); and telecommunications, computer and information services (see Table 1).

The EU-28 exported other business services to the value of EUR 224.0 billion, which was just over one quarter (27.3 %) of all its services exports in 2016. The next highest shares of EU-28 exports were recorded for transport services (16.5 % of all service exports in 2016; EUR 135 billion), travel services (13.9 %; EUR 114 billion), telecommunications, computer and information services (13.3 %; EUR 109 billion) and financial services (10.2 %; EUR 83 billion).

The structure of EU-28 imports was more concentrated: in 2016, other business services accounted for almost one third (32.2 %: EUR 222 billion) of the EU-28’s total imports of services, followed by transport services (17.2 %; EUR 118 billion), charges for use of intellectual property (16.1 %; EUR 111 billion) and travel services (14.8 %; EUR 102 billion).

Table 1: Value of extra-EU trade in selected services, EU-28, 2010 and 2016
(billion EUR)
Source: Eurostat (bop_its6_det)

Between 2010 and 2016, a growing share of the EU-28’s trade in services was accounted for by other business services, charges for the use of intellectual property, and telecommunications, computer and information services

The share of other business services in the total value of EU-28 service exports to non-member countries rose by 2.7 percentage points between 2010 and 2016 (see Figure 1). The same increase (+2.7 points) was recorded for charges in relation to the use of intellectual property, while the next highest increase (+2.1 points) was for the share of telecommunications, computer and information services. By contrast, the relative importance of transport services within extra-EU exports fell by 5.4 percentage points during the same period; note however that the absolute value of transport service exports to non-member countries continued to grow, albeit at a slower pace than the services average.

Figure 1: Extra-EU exports of services, EU-28, 2010 and 2016
(% of total)
Source: Eurostat (bop_its6_det)

A similar analysis relating to changes in the structure of extra-EU services imports reveals that a growing proportion of the EU-28’s imports were composed of charges for the use of intellectual property; their share of the EU-28 total increased by 7.4 percentage points between 2010 and 2016, while there was also a relatively fast increase in the share of other business services (+5.7 points). By contrast, the relative contribution of travel services and transport services declined, falling by 3.4 and 6.4 percentage points (note again that the absolute value of imports for both of these categories continued to rise). The figures presented in Figures 1 and 2 indicate that there has been a relatively rapid expansion in EU-28 trade flows for intellectual property and other business services, suggesting that multinational enterprises have sought to protect their innovations and brands while expanding into new markets, and have increasingly made use of a range of business services to deliver goods and services as efficiently as possible.

Figure 2: Extra-EU imports of services, EU-28, 2010 and 2016
(% of total)
Source: Eurostat (bop_its6_det)

In 2016, the EU-28 had a trade surplus for all but one of the 12 main service categories

With the exception of charges for the use of intellectual property (EUR -47.2 billion), the EU-28 ran a trade surplus in 2016 for all 12 of the main service categories detailed in Table 2. The largest trade surplus was for telecommunications, computer and information services (EUR 67.3 billion), followed by financial services (EUR 40.0 billion), transport services (EUR 17.0 billion) and insurance and pension services (EUR 16.8 billion).

The cover ratio provides an alternative measure for analysing the relative difference between EU-28 exports and imports; it is calculated as the value of exports divided by the value of imports and expressed as a percentage. In 2016, the value of EU-28 exports of telecommunications, computer and information services was almost 2.6 times as high as the value of EU-28 imports of the same services. The cover ratios for insurance and pension services, construction services and manufacturing services were also higher than 200 %, indicating that the value of EU-28 exports for these services was more than twice that recorded for EU-28 imports.

Table 2: Extra-EU trade balance and cover ratio for selected services, EU-28, 2010 and 2016
Source: Eurostat (bop_its6_det)

International trade in services — focus on selected service categories

This next section looks in more detail at developments for international trade in services with respect to the three service categories with the highest levels of extra-EU trade, namely:

  • transport services (BPM6 category SC);
  • travel services (SD);
  • other business services (SJ).

Transport services

Within the balance of payments, international trade in transport services covers both freight and passenger services. In the case of passenger transport, it includes services provided to non-residents by resident carriers and services provided to residents by non-resident carriers. In the case of freight, international trade in transport services covers freight services provided by resident operators within the boundaries of the customs frontier of the partner economy (exports of freight services), as well as freight services provided by non-resident operators in the reporting economy (imports of freight services).

Figure 3 shows developments for EU-28 international trade in transport services from 2010 to 2016. EU-28 exports of transport services to non-member countries exceeded the value of imports every year during the period 2010 to 2016, resulting in a persistent trade surplus. That said, while EU-28 imports of transport services steadily increased throughout the first five years of this period, with their largest increase in the value of exports recorded in 2015, exports rose during the period 2010-2012, then fell slightly and stagnated, before modest growth resumed in 2015. The global reduction in price of oil was, at least to some degree, passed through to final consumers in 2016, as the value of EU-28 imports and exports for transport services fell by 6.8 % and 5.8 % respectively.

Figure 3: Developments for extra-EU trade in transport services, EU-28, 2010-2016
Source: Eurostat (bop_its6_det)

Figure 4 shows the relative importance of the different transport services as regards their contribution to EU-28 exports and imports in 2015. The largest subcategory was sea transport, which accounted for more than half (51.6 %) of the EU’s transport services exports and for 43.1 % of the EU’s imports. The only other subcategory to record a double-digit share was air transport, with around one third of extra-EU exports (32.4 %) and imports (37.3 %).

In 2015, the United States was the EU’s main trading partner for transport services, accounting for 21.6 % of the EU-28’s exports to non-member countries and for 19.4 % of its imports (see Figure 5). It was followed by Switzerland (12.6 % of exports and 7.4 % of imports), China (5.9 % of exports and 8.2 % of imports) and offshore financial centres (4.0 % of exports and 5.7 % of imports).

Figure 4: Extra-EU trade in transport services, EU-28, 2015
(% share of total for transport services)
Source: Eurostat (bop_its6_det)


Figure 5: Principal extra-EU trade partners for transport services, EU-28, 2010 and 2015
(% of extra-EU total)
Source: Eurostat (bop_its6_det)

Travel services

Within the balance of payments, the travel category registers ‘visitor’ expenditure (taking account of persons who stay for less than one year and excluding, for example, expenditures related to cross-border commuters, seasonal workers and students); note also that the figures exclude any expenditure related to transport services. Exports of travel services cover goods and services for own use or to give away that are acquired from an economy by non-residents during visits to that economy. Imports of travel services cover goods and services for own use or to give away acquired from other economies by residents during visits to these other economies. For example, when Chinese tourists visit the EU the expenditure they make during their trip contributes towards the EU-28’s exports of travel services, whereas citizens from the EU Member States who go on holiday to Beijing contribute towards the value of EU-28 imports of travel services.

The EU-28 exported travel services to non-member countries that were valued at EUR 114 billion in 2016, while imports stood at EUR 102 billion. While the EU-28 ran a trade deficit for travel services in 2010 and 2011 — in other words, the expenditure of EU tourists visiting the rest of the world was higher than the expenditure of foreign tourists visiting the EU — this situation was reversed in 2012 and the EU-28 continued to record a trade surplus for travel services during the period 2013-2016 (see Figure 6).

The relative importance of travel services within the total value of extra-EU trade in services declined during the period 2010-2016. This was particularly true for EU-28 imports of travel services: their share of total imports for all services declined from 18.2 % in 2010 to 14.5 % by 2015, before a modest recovery in 2016 (to 14.8 %).

Figure 6: Developments for extra-EU trade in travel services, EU-28, 2010-2016
Source: Eurostat (bop_its6_det)

The EU-28’s main trading partner for travel services was the United States, which accounted for almost one quarter (19.4 %) of extra-EU exports in 2015 and for a somewhat higher share of its imports (22.4 %). Given their close geographic proximity, it is perhaps unsurprising to find that Switzerland (13.1 %) and Norway (7.8 %) had the second and third highest shares of extra-EU exports of travel services in 2015. They were followed by China (6.7 %) and Russia (6.2 %); note that the Chinese share of EU-28 exports of travel services almost doubled between 2010 and 2015.

The relative importance of the United States as the EU-28’s main origin of travel imports grew slightly between 2010 and 2015. Some 8.5 % of the EU-28’s imports of travel services in 2015 originated in Turkey, while it is also interesting to note that Australia and Thailand each accounted for 3.6 % of the EU-28’s imports (see Figure 7).

International trade in travel services within the EU is principally split as a function of geography, as the more southerly EU Member States tend to record a considerable trade surplus for travel services (as they welcome far more visitors and therefore record a higher level of exports). For example, the value of travel service exports from Croatia was more than 10 times as high as the value of its imports of travel services in 2015, while the same ratio for Greece revealed that its exports were valued some 6.6 times as high as its imports. The relative importance of travel services as part of total trade in services was generally quite high in a number of traditional tourist destinations; for example, travel services accounted for 71.0 % of all services exported by Croatia in 2015.

Figure 7: Principal extra-EU trade partners for travel services, EU-28, 2010 and 2015
(% of extra-EU total)
Source: Eurostat (bop_its6_det)

Other business services

As noted above, the category covering ‘other business services’ includes a diverse range of services, including research and development (R & D), legal services, accountancy and management consultancy, and real estate services. Figure 8 shows the development of international trade for the other business services aggregate, with the EU-28 recording a trade surplus throughout the period 2010-2016. Although the value of exports and imports increased steadily between 2010 and 2015, with the highest annual growth rates in 2015 (when exports rose by 15.0 % and imports by 22.5 %), there was a marked change to developments in 2016, as the value of EU-28 exports fell by 4.7 %, while imports continued to grow (up 7.2 %). This resulted in the trade surplus for other business services almost being cancelled out (EUR 1.7 billion in 2016, compared with a relative peak of EUR 35.2 billion in 2014).

Figure 8: Developments for extra-EU trade in other business services, EU-28, 2010-2016
Source: Eurostat (bop_its6_det)

Figure 9 shows the relative importance of the different business services as regards their contribution to EU-28 exports and imports in 2015. The largest subcategory for exports was legal, accounting and management consulting services, which accounted for just over one fifth (20.5 %) of the EU’s other business services exports. In contrast, research and development (R & D) was the largest subcategory for imports, accounting for almost one quarter (24.0 %) of the EU’s other business services imports.

Figure 9: Extra-EU trade in other business services, EU-28, 2015
(% share of total for other business services)
Source: Eurostat (bop_its6_det)

In 2015, the United States was the EU’s main trade partner for both imports and exports of other business services; it accounted for 40.1 % of all imports and 31.8 % of all exports; note that the share of the United States, despite already being relatively high, continued to grow between 2010 and 2015. Switzerland was the only other trade partner to record a double-digit share of EU-28 trade in 2015 (17.0 % of the EU’s exports and 10.2 % of its imports).

Figure 10: Principal extra-EU trade partners for other business services, EU-28, 2010 and 2015
(% of extra-EU total)
Source: Eurostat (bop_its6_det)


Box 3.4 — Development work on services trade by enterprise characteristics (STEC)

Statistics on services trade by enterprise characteristics (STEC) present traditional service trade statistics broken down by the characteristics of the enterprises involved in such trade.

STEC data are produced by combining statistical business register information with data on international trade in services at the enterprise level. This allows data on the value of each enterprise’s exports and imports to be linked to the equivalent enterprise’s characteristics that are provided in the business register. The resulting dataset makes it possible to analyse the population of traders using the various classifications that are provided by the register (for example, the size of enterprise, the type of ownership of the enterprise, or its main economic activity). By linking these different datasets it is possible to give more value to the data that has been collected without any additional burden on enterprises and with only modest costs for the compilers of these statistics.

In 2013, Eurostat set up a taskforce that was asked to define a set of STEC tabulations. The main results of the work undertaken by the taskforce during 2015-2016 included the development of a harmonised methodology and its publication in a STEC compilers’ guide (a co-publication between Eurostat and the OECD, 2017).

The development of STEC statistics represents a notable step towards integrating statistics on international trade in services into business statistics. This process will be further enhanced when moving from this set of experimental statistics towards a more coherent and complete set of STEC statistics covering all EU Member States.

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Balance of payments - International transactions (BPM6)


Balance of payments - International transactions (BPM6)
International trade in services, geographical breakdown (BPM6)