International trade inservices by type of

service Statistics Explained

Source : Statistics Explained (https://ec.europa.eu/eurostat/statisticsexplained/) - 25/09/2019 1

Data extracted in July2019.Planned article update: November 2021.

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

This article examines developments for international trade in services by type of service. While some typesof international services — like transport — have existed as long as there has been commercial activity, tradefor many other services has developed relatively recently as a result of market liberalisation and the introduc-tion of new information and communication technologies; these changes often eliminated a range of obstaclesand provided new means for supplying services remotely. As a result, some services have experienced consid-erable structural changes, as small and medium-sized enterprises (SMEs) have been replaced by much larger,international enterprises.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, hotel chains) or financial services (for example, retail banks or insurancecompanies), where it is relatively commonplace to find increased levels of concentration as multinational enter-prises expand their operations.

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

International trade in services — overall developmentsIn 2018, other business services accounted for the highest share of EU-28 trade in services

In 2018, the highest values of EU-28 international trade in services — as measured by the sum of exportsand imports to/from non-member countries — were recorded for:

• other business services (this diverse category includes, among others, services in the areas of research anddevelopment (R & D), professional and management consultancy, technical and trade-related services,architectural, engineering and scientific services, security and investigative services, real estate and otherservices to businesses);

• transport services;

• travel services;

• telecommunications, computer and information services;

• charges for the use of intellectual property (for example, royalties and licences);

• and financial services (see Table 1).

The EU-28 exported other business services to the value of EUR 234 billion in 2018, which was around onequarter (25.5 %) of all its services exports. The next highest shares of EU-28 exports in 2018 were recordedfor transport services (17.9 % of all service exports; EUR 164 billion), travel services (15.4 %; EUR 141 billion)and telecommunications, computer and information services (14.5 %; EUR 133 billion).

The structure of EU-28 imports was slightly more concentrated: in 2018, other business services accountedfor almost three tenths (29.2 %: EUR 213 billion) of the EU-28’s total imports of services, followed by transportservices (18.2 %; EUR 132 billion), travel services (15.2 %; EUR 111 billion) and charges for use of intellectualproperty (14.8 %; EUR 108 billion).

Table 1: Value of extra-EU trade in selected services, EU-28, 2010 and 2018(billion EUR)Source:Eurostat (bop_its6_det)

Between 2010 and 2018, a growing share of the EU-28’s trade in services was accounted for bytelecommunications, computer and information services, charges for the use of intellectual prop-erty, travel, and maintenance and repair services

The share of telecommunications, computer and information services in the total value of EU-28 service exportsto non-member countries rose by 3.2 percentage points between 2010 and 2018 (see Figure 1). The next largestincrease (2.1 percentage points) was recorded for charges in relation to the use of intellectual property, followedby travel services (1.0 percentage points) and maintenance and repair services (0.9 percentage points). By con-trast, the relative importance of transport services within extra-EU exports fell by 4.0 percentage points duringthe same period; note however that the absolute value of transport service exports to non-member countriescontinued to grow, albeit at a slower pace than the average for all services.

International trade in services by type of service 2

Figure 1: Extra-EU exports of services, EU-28, 2010 and 2018(% of total)Source: Eurostat(bop_its6_det)

A similar analysis relating to changes in the structure of extra-EU services imports (see Figure 2) reveals thata 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 6.1 percentage points between 2010 and 2018, while there was alsoa relatively fast increase in the share of other business services (up 2.7 percentage points). By contrast, therelative contribution of travel services and transport services declined, falling by 3.3 and 5.4 percentage points(note again that the absolute value of imports for both of these categories continued to rise).

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Figure 2: Extra-EU imports of services, EU-28, 2010 and 2018(% of total)Source: Eurostat(bop_its6_det)

The figures presented in Figures 1 and 2 indicate that there has been a relatively rapid expansion in EU-28trade flows for intellectual property and other business services.

In 2018, 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 -41.1 billion), the EU-28 ran a tradesurplus in 2018 for all 12 of the other main service categories detailed in Table 2. The largest trade surplus wasfor telecommunications, computer and information services (EUR 81.9 billion), followed by financial services(EUR 32.1 billion), transport services (EUR 31.9 billion) and travel services (EUR 30.7 billion).

The cover ratio provides an alternative measure for analysing the relative difference between EU-28 exportsand imports; it is calculated as the value of exports divided by the value of imports and expressed as a percent-age. In 2018, the value of EU-28 exports of telecommunications, computer and information services was almost2.6 times as high as the value of EU-28 imports of the same services (a cover ratio of 259.5 %). The cover ratiosfor insurance and pension services and construction services were also higher than 200 %, indicating that thevalue of EU-28 exports for these services was more than twice that recorded for EU-28 imports.

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Table 2: Extra-EU trade balance and cover ratio for selected services, EU-28, 2010 and2018Source: Eurostat (bop_its6_det)

International trade in services — focus on selected service categoriesThis next section looks in more detail at developments for international trade in services with respect to thethree 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

International trade in services flows show the transactions between residents and non-residents according to12 main service categories of the extended balance of payments services classification ( EBOPS 2010 ). Trans-port services is the second largest of the 12 service categories (after other business services), accounting for 18% of total services exports and imports in 2018. Transport (as defined by the Balance of Payments and Inter-national Investment Position Manual — Sixth Edition (BPM6) paragraph 10.74) is the process of carriage ofpeople and objects from one location to another as well as related supporting and auxiliary services. Transportcan be classified according to:

(i) mode of transport ; and

(ii) what is carried.

The transport services category can be further divided into four sub-categories (as defined by the BPM6 para-graph 10.74) , namely sea transport, air transport, other modes of transport, and postal and courier services.

Figure 3 shows developments for EU-28 international trade in transport services from 2010 to 2018. EU-28exports of transport services to non-member countries exceeded the value of imports every year during theperiod 2010 to 2018, resulting in a persistent trade surplus. EU-28 exports and imports of transport servicesdeveloped in a broadly similar manner between these years: growth was recorded between 2010 and 2012,followed by two years of decline or stability, strong growth in 2015, a decline in 2016 and a rebound in 2017.As such, the provisional data for 2018 show the strongest divergence in developments, with a small decreaserecorded for exports compared with relatively strong growth for imports. In most years during this period, theshare of transport services within the total trade for all services declined: for exports the only increase in theshare was in 2017, while for imports a larger decrease in its share between 2010 and 2016 was somewhat offsetby increases in both 2017 and 2018.

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Figure 3: Developments for extra-EU trade in transport services, EU-28, 2010-2018Source: Eu-rostat (bop_its6_det)

Figure 4 shows the relative importance of the different transport services as regards their contribution to EU-28exports and imports in 2017. The largest subcategory was sea transport, which accounted for close to half (48.9%) of the EU-28’s transport services exports and for 44.8 % of the EU-28’s transport services imports. Theonly other subcategory to record a double-digit share was air transport, with more than one third of extra-EUexports (35.9 %) and imports (35.6 %).

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Figure 4: Extra-EU trade in transport services, EU-28, 2017(% share of total for transportservices)Source: Eurostat (bop_its6_det)

In 2017, the United States was the EU’s main trading partner for transport services, accounting for 20.5 % ofthe EU-28’s exports to non-member countries and for 16.7 % of its imports (see Figure 5). It was followed bySwitzerland (9.3 %) for exports and by offshore financial centres (9.7 %) for imports.

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Figure 5: Principal extra-EU trade partners for transport services, EU-28, 2010 and 2017(% ofextra-EU total)Source: Eurostat (bop_its6_det)

Travel services

Within the balance of payments, the travel category registers ’visitor’ expenditure (taking account of personswho 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 aneconomy by non-residents during visits to that economy. Imports of travel services cover goods and services forown use or to give away acquired from other economies by residents during visits to these other economies. Forexample, when Chinese tourists visit the EU the expenditure they make during their trip contributes towardsthe EU-28’s exports of travel services, whereas citizens from the EU Member States who go on holiday to Beijingcontribute towards the value of EU-28 imports of travel services through their purchases there.

The EU-28 exported travel services to non-member countries valued at EUR 141 billion in 2018, while im-ports stood at EUR 111 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 expenditureof foreign tourists visiting the EU — this situation was reversed in 2012 and the EU-28 continued to record

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a trade surplus for travel services during the rest of the period shown in Figure 6. The value of exports andimports of travel services increased each year except for 2016.

The relative importance of travel services within the total value of extra-EU trade in services was relativelystable between 2010 and 2018 for exports, ranging between 14.0 % and 15.4 %. By contrast, for imports theshare fell between 2010 and 2016 (from 18.5 % to 13.9 %), before recovering somewhat in 2017 and 2018 toreach 15.2 %.

Figure 6: Developments for extra-EU trade in travel services, EU-28, 2010-2018Source: Eurostat(bop_its6_det)

The EU-28’s main trading partner for travel services was the United States, which accounted for almost onefifth (19.1 %) of extra-EU exports in 2017. Given their close geographic proximity, it is perhaps unsurprisingto find that Switzerland (13.0 %) and Norway (7.2 %) had the second and fourth highest shares of extra-EUexports of travel services in 2017, separated by China (7.7 %) and followed by Russia (6.1 %). Note that theChinese share of EU-28 exports of travel services more than doubled between 2010 and 2017.

The United States was also the largest partner for the EU-28’s imports of travel services in 2017, its 23.4% share of EU-28 imports was up from 21.1 % in 2010. Some 7.5 % of the EU-28’s imports of travel services in2017 originated in Switzerland and 5.7 % in Turkey, separated by the 6.4 % share from offshore financial centres.Further away, Thailand and Australia figured as the fifth and sixth largest origins of the EU-28’s imports oftravel services, with 4.3 % and 3.2 % shares respectively, while neighbouring Norway also recorded a 3.2 % share(see Figure 7).

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Figure 7: Principal extra-EU trade partners for travel services, EU-28, 2010 and 2017(% ofextra-EU total)Source: Eurostat (bop_its6_det)

International trade in travel services within the EU is principally split as a function of geography, as the moresoutherly EU Member States tend to record a considerable trade surplus for travel services (as they welcomefar more visitors and therefore record a higher level of exports). For example, the value of travel service exportsfrom Greece and Croatia was seven times as high as the value of their imports of travel services in 2017, whilethe same ratio for Malta, Portugal, Spain, Slovenia, Hungary, Bulgaria and Cyprus Greece revealed that theirexports were valued at least twice as high as their imports. The relative importance of travel services as partof total trade in services was generally quite high in a number of traditional tourist destinations; for example,travel services accounted for 70.2 % of all services exported by Croatia in 2017 and just over half (51.5 %) ofthe total in Portugal.

Other business services

As noted above, the category covering ’other business services’ includes a diverse range of services, includ-ing R & D, legal services, accountancy and management consultancy, and real estate services. Figure 8 showsthe development of international trade for the other business services aggregate, with the EU-28 recording atrade surplus throughout the period from 2010 to 2018, except in 2016. The value of exports and imports

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increased steadily between 2010 and 2015. For imports, this growth continued until 2016, before falling quitestrongly in 2017 and more moderately in 2018. By contrast, for exports there was a marked slowdown in growthin 2016 and 2017 (the first of these resulting in the only deficit for these services during the period studied),followed by a moderate fall in 2018.

Figure 8: Developments for extra-EU trade in other business services, EU-28, 2010-2018Source:Eurostat (bop_its6_det)

Figure 9 shows the relative importance of the different business services as regards their contribution to EU-28exports and imports in 2017. The largest subcategory for exports was legal, accounting and management con-sulting services, which accounted for just over one fifth (21.8 %) of the EU-28’s other business services exports.By contrast, work undertaken on a systematic basis to increase the stock of knowledge (part of R & D) wasthe largest subcategory for imports, accounting for almost one quarter (23.5 %) of the EU-28’s imports of otherbusiness services.

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Figure 9: Extra-EU trade in other business services, EU-28, 2017(% share of total for otherbusiness services)Source: Eurostat (bop_its6_det)

In 2017, the United States was the EU’s main trade partner for both imports and exports of other businessservices. It accounted for 42.3 % of EU-28 imports and 32.5 % of EU-28 exports of other business services;note that the share of the United States, despite already being relatively high, grew between 2010 and 2017.Switzerland was the only other trade partner to record a double-digit share of EU-28 exports in 2017 (16.0 %)and was also the second largest partner for imports (8.6 % of the total).

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Figure 10: Principal extra-EU trade partners for other business services, EU-28, 2010 and 2017(%of extra-EU total)Source: Eurostat (bop_its6_det)

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Development work on services trade by enterprise characteristics (STEC)

Statistics on services trade by enterprise characteristics (STEC) present traditional service trade statis-tics 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 interna-tional trade in services at the enterprise level. This allows data on the value of each enterprise’s exports andimports 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 classificationsthat are provided by the register (for example, the size of enterprise, the type of ownership of the enterprise, orits main economic activity). By linking these different datasets it is possible to give more value to the data thathas been collected without any additional burden on enterprises and with only modest costs for the compilersof these statistics.

In 2013, Eurostat set up a taskforce that was asked to define a set of STEC tabulations. The main re-sults of the work undertaken by the taskforce during the period from 2015 to 2016 included the developmentof a harmonised methodology and its publication in a STEC compilers’ guide (a joint publication of Eurostatand the OECD, 2017).

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

Source data for tables and graphs• International trade in services by type of service: tables and figures

Other articles• Globalisation patterns in EU trade and investment

Main tables• Balance of payments - International transactions (BPM6) (t_bop_6)

Database• Balance of payments - International transactions (BPM6) (bop_6)

• International trade in services, geographical breakdown (BPM6) (bop_its6)

Dedicated section• Balance of payments

• Economic globalisation

• International trade in services

MethodologyMetadata

• Balance of payments - international transactions (BPM6) (ESMS metadata file — bop_6_esms)

Further methodological information

• Balance of payments

• International trade in services

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External links• European Commission — globalisation and the EU economy

• European Commission — reflection paper on harnessing globalisation (COM(2017) 240)

• International Monetary Fund — data

• United Nations Statistics Division — national accounts data

View this article online at http: // ec. europa. eu/ eurostat/ statistics-explained/ index. php/ International_trade_ in_ services_ by_ type_ of_ service

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