Services

Key characteristics of services are identified, which leads to both forms in which transactions are organised and thereby the options for international exchange in services. The requirement for interaction of producers and consumers is stressed, which contributes to higher degree of regional intensity in services trade. New data on trade by different modes are reported, and of interest is the continued importance of the delivery of services via offshore establishments. However, an important next stage of development of services trade will be in digital formats, which also creates the possibility of a more global orientation and falling regional intensity in services trade over time. Various features of services contribute to risks of market failures which then drive the regulatory policies applied to services, and which in turn can become barriers to international transactions. Various measures of these barriers are reviewed. Services reform appears to lag in the East Asian region. There is also a lack of progress of services reform associated with trade agreements, which is mainly because of the importance of domestic regulation as a barrier to trade. Priority for regional cooperation is then the alignment of regulatory processes, which is not amenable to exchanges of policy change at the margin as might occur in tariff negotiations. The process of servicification of manufacturing is highlighted and the development of global value chains in services themselves is noted.