WTO points to the importance of services to broader economic activity and its role in connecting supply chains and facilitating merchandise trade. It also suggests that services trade will be key to economic recovery globally. Services such as telecommunications and computing that are vital for online supply and those such as distribution, transport and logistics that facilitate merchandise trade will help to support economic growth.
More specifically, services sectors have been heavily affected by the COVID-19 pandemic. Tourism, transport and distribution services, for example, have suffered as a result of mobility restrictions and social distancing measures imposed for public health reasons.
At the same time, the crisis has emphasized the importance of services that enable online supply, such as telecommunications and computer services, as well as the broader infrastructural role of transport, financial, distribution and logistics services in facilitating trade and economic growth.
What is more, given the role of services in providing inputs for other economic activities, including connecting supply chains and facilitating trade in goods, disruptions in services supply are having a broad economic and trade impact.
In fact, the type and extent of effects on trade in services vary by sector and mode of supply. Trade in services that regard proximity between suppliers and consumers has been severely impeded. GATS mode 2 (isupply in the context of the movement of consumers abroad) and mode 4 (involving the temporary movement of natural persons) have been largely paralysed.
The crisis is also leading to a greater focus on online supply in sectors such as retail, health, education, telecommunications and audiovisual services. Suppliers are accelerating efforts to expand their online operations and consumers are adopting new habits that may contribute to a long-term shift towards online services. In the future, increased supply of services through digital networks could increase trade through mode 1 (cross-border supply).
Services sectors, and the creation of conditions conducive to trade in services, will be key to the recovery from the economic slowdown