EU and WTO Members Reach Deal to Simplify Trade in Services

On December 2nd, 67 members of the World Trade Organization (WTO), including the European Union, concluded negotiations on an agreement to simplify trade in services and to reduce red tape in that sector. The signatories, including key players such as the United States, the United Kingdom, EU, and China, represent 90 % of all services trade.  

Reducing costs and making processes more efficient

OECD has previously estimated that looser regulations within the G20 countries could reduce trade costs up to 6 per cent. According to the European Union, this agreement will help reduce the costs of global service trade by more than USD 150 billion each year. 

One of the aims of the agreement is to improve the processing of applications and permits necessary to supply services in member states. For instance, authorities are required to provide information to the applicants, as well as communicate with them timely and provide them necessary guidance through the application processes. 

Additionally, member states are required to ensure that fees for authorizing merchants to supply services are reasonable and transparent and that they do not in themselves restrict supply of services. The development of open and transparent processes in technical standards is also promoted in the agreement.

Strengthening equality

Easing up these processes is expected to be especially beneficial for small and medium-sized enterprises with limited resources. The agreement is also fruitful for the EU digital strategy, since sectors such as telecommunications, computer services, engineering, and commercial banking stand to benefit from it.  

The agreement also marks a milestone in gender equality in the WTO. For the first time ever, a provision on non-discrimination between men and women within services trade regulations is included in a WTO text.  

The signatories are to make specific commitments by the end of 2022 in order to promote trade in services, for example by simplifying permit processes or by ensuring their transparency. The adoption of the measures set out in the WTO reference paper is expected to significantly reduce cost of trade and alleviate the damage caused by the COVID-19 pandemic. The commitments made in accordance with the reference paper will then be included in each member’s so-called GATS Schedules. 

Text and additional information
Markus Myhrberg, Partner, [email protected],  tel. +358 40 505 5343
Henri Tuure, Legal trainee, [email protected]