V:Trade-openness in electronic commerce-related services

V. Trade-openness in electronic commerce-related services

Table 5 showed the importance of services trade which is already conducted largely in electronic form. However, trade in these sectors still lags considerably behind trade, for example, in manufacturing. The development of electronic commerce could change this picture as many services will become tradeable more easily. Table 6 reports that cross-border trade (exports and imports) as a share of sectoral value-added lies between a low of 2.7 per cent in personal, cultural and recreational services and a high of 26.5 per cent in other business services. Cross-border trade (exports plus imports) for all service sectors is close to one fifth of value added. This compares to over 50 per cent of GDP for total goods and services trade in the OECD countries represented in Table 6. Trade-openness in services is comparatively high in the small service-oriented economies such as the Czech Republic and the Netherlands.

Services trade, according to the WTO definition, also includes sales by companies' foreign affiliates. This is also sometimes referred to as establishment trade or "mode 3" trade under GATS. Affiliate trade data are very scarce and are often not directly comparable with balance-of-payments and national accounts data. The only country that provides relatively comprehensive data is the United States. Table 7 provides data on cross-border and affiliate trade for electronic-commerce-related services sectors. Affiliate exports (or sales by U.S. affiliates abroad to foreigners) of distribution, communication, financial, other business and recreational services mostly exceed the respective figures for cross-border sales to foreigners. The picture is less balanced for imports. Despite the considerable magnitudes of trade, the combined openness indicator for mode 1 and mode 3 trade in the United States ranges from 8.6 per cent to 21.6 per cent (Table 7). Combined trade under both these modes is still below the overall average U.S. trade-openness indicator of 22.7 per cent.