Examples
Some of the most common examples of trade in service would be: [1]
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- Business and professional services, including:
Trade in Services refers to the sale and delivery of an intangible product, called a service, between a producer and consumer. Trade in services that takes place between a producer and consumer that are, in legal terms, based in different countries is called International Trade in Services.
International trade in services is defined by the Four Modes of Supply of the General Agreement on Trade in Services (GATS).
A "natural person" is a human being, as distinct from legal persons such as companies or organisations. Countries can freely decide where to liberalize on a sector-by-sector basis, including which specific mode of supply they want to cover for a given sector.
Mode 2 (Consumption Abroad) is by far the most liberalized mode in terms of commitments by WTO members. This is mostly due to governments being less likely to restrict the movements of citizens outside domestic borders (e.g. tourists). Mode 1 (Cross-Border Trade) is not often committed, mostly because it is impossible for many services to be supplied remotely (e.g. construction services), while Mode 3 (Commercial Presence) is more open, reflecting its crucial role in driving the international supply of services, transferring know-how and improving the capacity of economies to participate in global value chains. Mode 4 (Presence of Natural Persons) has the lowest depth of commitments, probably due to a number of sensitivities involved with the movement of foreign workers. [1]
In 2014, global trade in services totaled some $3.8 trillion, with Mode 3 (commercial presence) accounting for 55% of the total, followed by Mode 1 (cross-border trade) at 30%, then Mode 2 ( consumption abroad) at 10%, and Mode 4 (presence of natural persons) the lowest share, at less than 5%. [1]
In wealthy developed economies, services comprise a significant share of GDP and employment. For example, services account for 70% of economic output in the United States and 75% in the European Union.
During the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services was drafted, and became enshrined as one of the four pillars of the international treaty comprising the World Trade Organization Agreement in 1995.
Regional trade in services agreements are also negotiated and signed between regional economic groupings such as CARICOM, North American Free Trade Agreement (NAFTA), ASEAN and the Commonwealth of Independent States (Commonwealth of Independent States Agreement on Free Trade in Services, Establishment, Operations and Investment). All single markets and economic unions (European single market, European Economic Area, Gulf Cooperation Council, Central American Common Market, CARICOM Single Market and Economy, Eurasian Economic Space and Mercosur) with "four economic freedoms" also cover free trade in services.
Beginning in February 2012, 50 countries (28 of which are represented by the European Union) around the world began negotiating the Trade in Services Agreement (TISA). TISA negotiations primarily comprised high- and upper-middle income countries who were members of the WTO and hoped to further liberalize trade in financial services, healthcare, and transportation between themselves. The agreement has not progressed since early 2016 due to uncertainty surrounding negotiations in the aftermath of many elections that occurred that year.
Some of the most common examples of trade in service would be: [1]
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A free trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers, import quotas and tariffs, and to increase trade of goods and services with each other. If natural persons are also free to move between the countries, in addition to a free trade agreement, it would also be considered an open border. It can be considered the second stage of economic integration.
The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that govern international trade in cooperation with the United Nations System. The WTO is the world's largest international economic organization, with 164 member states representing over 98% of global trade and global GDP.
The General Agreement on Trade in Services (GATS) is a treaty of the World Trade Organization (WTO) which entered into force in January 1995 as a result of the Uruguay Round negotiations. The treaty was created to extend the multilateral trading system to service sector, in the same way the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade.
An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an exporter; the foreign buyers is an importer. Services that figure in international trade include financial, accounting and other professional services, tourism, education as well as intellectual property rights.
Non-tariff barriers to trade are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs. Such barriers are subject to controversy and debate, as they may comply with international rules on trade yet serve protectionist purposes.
Trade can be a key factor in economic development. The prudent use of trade can boost a country's development and create absolute gains for the trading partners involved. Trade has been touted as an important tool in the path to development by prominent economists. However trade may not be a panacea for development as important questions surrounding how free trade really is and the harm trade can cause domestic infant industries to come into play.
Goods are items that are usually tangible, such as pens or apples. Services are activities provided by other people, such as teachers or barbers. Taken together, it is the production, distribution, and consumption of goods and services which underpins all economic activity and trade. According to economic theory, consumption of goods and services is assumed to provide utility (satisfaction) to the consumer or end-user, although businesses also consume goods and services in the course of producing other goods and services.
A geographical indication (GI) is a name or sign used on products which corresponds to a specific geographical location or origin. The use of a geographical indication, as an indication of the product's source, is intended as a certification that the product possesses certain qualities, is made according to traditional methods, or enjoys a good reputation due to its geographical origin.
A free-trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occur when two countries agree to loosen trade restrictions between the two of them, generally to expand business opportunities. Multilateral trade agreements are agreements among three or more countries, and are the most difficult to negotiate and agree.
In international trade, market access refers to a company's ability to enter a foreign market by selling its goods and services in another country. Market access is not the same as free trade, because market access is normally subject to conditions or requirements, whereas under ideal free trade conditions goods and services can circulate across borders without any barriers to trade. Expanding market access is therefore often a more achievable goal of trade negotiations than achieving free trade.
Trade in services statistics are economic statistics which detail international trade in services. They received a great deal of focus at the advent of services negotiations which took place under the Uruguay Round, which became part of the General Agreement on Trade in Services, one of the four principal pillars of the World Trade Organization (WTO) trade treaty, also called the "WTO Agreement".
Foreign affiliate trade statistics (FATS), also known as transnational corporation (TNC) data details the economic operations of foreign direct investment-based enterprises.
Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives. Business costs may be a direct function of collecting information and submitting declarations or an indirect consequence of border checks in the form of delays and associated time penalties, forgone business opportunities and reduced competitiveness.
Since its creation in 1995, the World Trade Organization (WTO) has worked to maintain and develop international trade. As one of the largest international economic organizations, it has strong influence and control over trading rules and agreements, and thus has the ability to affect a country's economy immensely. The WTO policies aim to balance tariffs and other forms of economic protection with a trade liberalization policy, and to "ensure that trade flows as smoothly, predictably and freely as possible". Indeed, the WTO claims that its actions "cut living costs and raise standards, stimulate economic growth and development, help countries develop, [and] give the weak a stronger voice." Statistically speaking, global trade has consistently grown between one and six percent per annum over the past decade, and US$38.8 billion were allocated to Aid for Trade in 2016.
The Gender and Trade Initiative (GATI) is an initiative of the Society for Conflict Analysis and Resolution (SOFCAR) a New Delhi–based research and advocacy organisation.
An international investment agreement (IIA) is a type of treaty between countries that addresses issues relevant to cross-border investments, usually for the purpose of protection, promotion and liberalization of such investments. Most IIAs cover foreign direct investment (FDI) and portfolio investment, but some exclude the latter. Countries concluding IIAs commit themselves to adhere to specific standards on the treatment of foreign investments within their territory. IIAs further define procedures for the resolution of disputes should these commitments not be met. The most common types of IIAs are bilateral investment treaties (BITs) and preferential trade and investment agreements (PTIAs). International taxation agreements and double taxation treaties (DTTs) are also considered IIAs, as taxation commonly has an important impact on foreign investment.
Integration is a political and economic agreement among countries that gives preference to member countries to the agreement. General integration can be achieved in three different approachable ways: through the World Trade Organization (WTO), bilateral integration, and regional integration. In bilateral integration, only two countries economically cooperate with one another, whereas in regional integration, several countries within the same geographic distance become joint to form organizations such as the European Union (EU) and the North American Free Trade Agreement (NAFTA). Indeed, factors of mobility like capital, technology and labour are indicating strategies for cross-national integration along with those mentioned above.
A customs territory is a geographic territory with uniform customs regulations and there are no internal customs or similar taxes within the territory. Customs territories may fall into several types:
This article is intended to give an overview of the trade policy of South Korea. In 1945 Korea was liberated from the Empire of Japan at the end of World War II. A destructive drought in 1958 forced Korea to import large amounts of food grains. In 1950, the Korean war broke out, which destroyed more than two-thirds of the nation's production facilities and most of its infrastructure. Trade policy of South Korea has taken many shifts, from import substitution to globalization and there has been significant impact on the economy for the same.
The Trade in Services Agreement (TiSA) was a proposed international trade treaty between 23 Parties, including the European Union, United Kingdom and the United States. The agreement aimed at liberalizing the worldwide trade of services such as banking, healthcare, and transport. Criticism about the secrecy of the agreement arose in June 2014, after WikiLeaks released a classified draft of the proposal's financial services annex, dated the previous April. Another release took place in June 2015, and another took place in May 2016. As of 2021, no such agreement has ever been reached.
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