Several trends, including digital innovations, have resulted in the rapid growth of services trade. Increasingly, companies are looking for new markets for their services, including overseas. Below are some practical steps that businesses can take to start identifying opportunities for exporting services:
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) General Agreement on Trade in Services. These are:
- 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, is present in a foreign country on a temporary basis 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?
- Assess services trade readiness: Exporting your services may involve additional staff, time, financial, and/or legal resources. Companies need to have strategic business plans and management commitments in order to seize services trade opportunities. For a good example of the services export process, see the EU Services Export Guide.
- 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 as for exporting services more generally. Businesses can also visit EcomConnect, a tool that helps businesses connect with partners, suppliers, investors, and customers.
- Check for any benefits from regional trade agreements: Services exports may be subject to preferential market access under regional trade agreements (see guide on trade agreements) between the trading partners.
- 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 licences 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.
Where can I learn more?