What Should I Know Before Exporting My Service?
Several trends, including digital innovations, have resulted in the rapid growth in the export of services. Service exports are defined as any service provided by a person or business in one customs territory delivered to or provided to people or businesses from another customs territory. Increasingly, companies are looking for new markets for their services, including international markets.
How can services be exported?
There are four different ways, or ‘modes of supply,’ for exporting services, as defined in the World Trade Organization’s (WTO) in the General Agreement on Trade in Services GATS.
Cross-border supply (Mode 1): When your company is based in one country and supplies services to a customer in a different country. For example, an architect in country A sends building plans to a developer in country B.
Consumption abroad (Mode 2): When your company supplies a service to a foreign customer who is present in your country. For example, this includes hotel or restaurant services supplied to foreign visitors.
Commercial presence (Mode 3): When your company establishes a commercial presence in a foreign market, such as opening a subsidiary, branch, or representative office, to provide services to local consumers. This is the case, for instance, of a foreign supermarket serving customers in the local market.
Presence of natural persons (Mode 4): When you, as an independent service supplier, or an employee of your company, are present in a foreign country temporarily to supply a service to local customers. For example, an IT specialist is abroad to develop a new piece of software for a foreign client.
What are the key practical steps for exporting services?
- Decide if your service is ready for export:
- Is your service already successful in your domestic market?
- Does your company have the capacity to offer this service in export markets? Does it have sufficient staff, time, financial and legal resources?
- Is your company’s management committed to expanding into export markets?
- Does your company have a comprehensive financial/marketing/business plan with clearly defined goals in support of exporting?
- Does your company have a concrete strategy for how to export the service? For example, you can export your service directly to your buyer in your target market, such as another company or a consumer. Or you could export via e-commerce platforms?
- Is your intellectual property protected in export markets?
- Does your company have the capacity and expertise to adapt its service according to cultural preferences or different standards in export markets?
- Find target markets and customers: Trade agencies, chambers of commerce, and other business support organizations may offer online information tools and networking events for finding target markets and customers as well general exporting information.
- Check for any benefits from regional trade agreements: Services exports may be subject to preferential market access under regional trade agreements (see Trade4MSMEs guide on trade agreements) the Trade4MSME guide on trade agreements provides more information.
- Meet the conditions in target markets: Depending on which mode of supply you rely on to trade, which market you are targeting, and which service you are exporting, you may face various requirements and restrictions in the target market. These can include:
- Mode 1 (cross-border) service suppliers may need to obtain licenses and/or authorizations, comply with local presence requirements, and/or face nationality requirements.
- Mode 2 (consumption abroad) exports of services would generally not entail meeting additional conditions beyond those required to supply services domestically.
- Mode 3 (commercial presence) service suppliers may need to acquire licenses and/or authorizations, be required to establish as a specific type of legal entity, and/or be confronted with foreign equity caps or discriminatory procedures.
- Mode 4 (presence of natural persons) services exports often require securing business visas, having diplomas recognized, or acquiring specific qualifications. These exports may also have to contend with quotas or labor market tests.
Links to Supporting Information
WTO World Trade Organization WTO | Services – The GATS: objectives, coverage and disciplines
European Commission Guide for export of services | Access2Markets (europa.eu) Steps to take to export a service.
International Trade Centre ITC ecomConnect Connects entrepreneurs, organisations and industry experts to share e-commerce solutions and access free learning resources.
Trade4MSMEs Guide Trade Agreements
The Institute of Export and International Trade Export essentials: getting started selling services overseas – The Institute of Export and International Trade