NextGen Day

Asia-Pacific Economic Cooperation (APEC) member economies have been warned by trade experts from the Organization for Economic Co-operation and Development (OECD) to remove obstacles to trade in services or risk losing out economically and socially.

The services sector, regarded as a new driver of economic growth, has attracted attention due to its dominance in most APEC economies, claim the trade experts.

According to a press release released by the APEC Group on Services and received here on Monday, its impact on the economy and employment possibilities is so significant that APEC leaders asked officials to draft a strategic roadmap with aims to accomplish in 2025 in 2016.

The APEC Group on Services convenor, Thomas Fine, stated that “two years before the deadline, we are still not on target and need to push hard to ensure that we have a robust services environment to drive economic growth.”

The APEC Services Competitiveness Roadmap (ASCR) outlines three main objectives for the year 2025: first, gradually reducing barriers to trade and investment in services; second, increasing the proportion of APEC economies’ exports to the world’s total services exports; and third, increasing trade in services to exceed 6.8 percent and reach the top added value of the services sector to the region’s total gross domestic product (GDP).

According to the APEC Policy Support Unit (PSU), trade in commercial services in the region reached a record low in 2020, dropping to US$3.7 trillion from US$4.7 trillion in 2019.

Although APEC is significantly behind schedule due to the interruptions brought on by the coronavirus disease 2019 (Covid-19) pandemic, the PSU stated that it anticipates the number to be closer to the 2019 level currently.

“Many factors could affect services trade, and one critical factor is government policies,” stated Andre Wirjo, an analyst with the PSU, during a discussion conducted in Detroit on May 18–20, 2023.

“Examples of these policies include restrictive measures affecting the supply of services via commercial presence and the movement of natural persons — all of which affected cross-border service trade,” he continued.

According to Wirjo, early research revealed that many economies have taken down some of the emergency restrictions implemented during the pandemic, particularly those that restricted people’s freedom of movement and travel.

However, between 2021 and 2022, economies also enacted non-Covid-19-related trade restrictions.

An expert from the OECD shared his perspectives with the audience at the APEC Group on Services debate, emphasizing the importance of fostering an environment where services may flourish in the Asia-Pacific region to foster global prosperity.

“With the monitoring of services trade restrictions by both the PSU and OECD, it remains a cause for concern, and what policymakers need to be mindful of is that you are missing opportunities for services policies to boost inclusive economic recovery,” said John Drummond, head of the OECD’s division of trade in services.

Through its Services Trade Restrictiveness Index (STRI), the organization assesses the level of service trade.

Drummond emphasized that policymakers could move forward with trade-friendly reforms like transparency, automation, and border agency cooperation and accelerate efforts to lower barriers to essential services like logistics, transportation, courier, and distribution.

The experts also talked about how to increase the participation and equality of women in the service sector, the importance of structural reforms, and how the use of artificial intelligence can both open up new opportunities and alter the market for services.

Another top goal, according to them, is strengthening the infrastructure and competitiveness of the communications industry.

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