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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. Having access to services is a prerequisite for strong 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, telecommunications or transport systems. 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 across borders, 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 Preferences.
  • Mutual Recognition Agreements (MRAs) are instruments that facilitate market access by reducing costs and time associated with mandatory product certification.
  • The significance of non-tariff barriers to trade such as technical barriers to trade or sanitary and phytosanitary measures has increased considerably, 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. Yet globalisation means 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 EU’s gross domestic product. Additionally, over three-quarters of EU jobs are in the services sector. No country can prosper today without an efficient services infrastructure.

EU trade policy on goods and services

The EU wants to free up global trade in goods and services through both the WTO negotiations and through bilateral and regional trade agreements.

Multilateral and plurilateral negotiations on goods and services:

Through the Doha round, the EU is aiming to improve conditions for goods and services’ trade around the world by reducing import tariffs, removing non-tariff barriers as far as possible and improving commitments to freer trade in services.

The EU has proposed to reduce tariff protection worldwide by applying a formula for tariff reduction and by selecting certain sectors for full tariff elimination. Thus far no agreement has been reached in the WTO, partly due to disagreements on the contribution emerging countries would have to make to reducing tariffs.

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 quadrupled trade in information technology products.
  • Since the ITA was signed in 1996, many products have become obsolete, while new products have emerged. Entire sectors have become digitalised, such as medical devices and other sophisticated instruments.
  • At the Nairobi Ministerial Conference in December 2015, the agreement was expanded to cover additional products.
  • The EU and other ITA members want to address non-tariff barriers (NTBs) in the area of information technology.

More information on the ITA and its update.

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 significant liberalisation of trade in goods as well as provisions covering non-tariff barriers and trade in services. For example:

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:

The EU also seeks to conclude Economic Partnership Agreements with African, Caribbean and Pacific (ACP) countries.

More on goods and services