A recent report by the OECD indicates a rise in services trade restrictions globally in 2020, exacerbating the economic impacts of the COVID-19 pandemic. The OECD Services Trade Restrictiveness Index (STRI) for 2021 highlights a growing trend in the implementation of new trade barriers across various sectors, notably in computer services, commercial banking, and broadcasting. This coincides with a significant drop in global services trade, which saw a 24% decrease in the third quarter of 2020 compared to the previous year.
Despite this overall trend towards increased restrictiveness, the report notes a reduction in barriers to cross-border digital trade in 2020, a response to the pandemic’s challenges. Governments issued more measures to facilitate digital trade than in previous years, supporting remote work and online business activities. OECD Secretary-General Angel GurrÃa emphasized the pivotal role of digitally-delivered trade and enabling services like telecommunications during the pandemic. He stressed the importance of reducing trade restrictions in services for a robust, inclusive, and sustainable economic recovery.
The OECD report, assessing services trade regulations in 48 countries accounting for over 80% of the world’s services exports, identifies countries with exemplary regulatory practices, such as the Czech Republic, Latvia, the Netherlands, Japan, Lithuania, and the United Kingdom. It also acknowledges reform efforts in Brazil, China, Iceland, Indonesia, and Kazakhstan. The report suggests that easing barriers to services trade can significantly reduce trade costs. On average, a potential reduction of more than 15% in trade costs could be achieved within 3-5 years if countries align half of their regulatory practices with those of the top performers. The OECD advocates for an ambitious services trade agenda, including new market access commitments in comprehensive trade and investment agreements, to realize these benefits.
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