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International Services Agreement on Trade: Great for U.S. Economy and World Trading System

January 15, 2013

Today the Office of the United States Trade Representative (USTR) notified Congress of its intent to enter into negotiations on a new services-only plurilateral trade agreement. That’s great news for the U.S. economy and the world trading system. At a time when growth opportunities are scarce, liberalization of global service markets could give a much needed boost to the U.S. economic recovery. That’s because services are a huge part of our economy; they account for approximately 75% of U.S. economic output and about 80% of U.S. private sector employment. And worldwide they make up about 70% of economic output and jobs.   

FedEx strongly supports this new International Services Agreement (ISA) initiative. It will benefit FedEx by removing many of the investment and other market access barriers that our industry faces around the world. It will be good for many of our customers as well because they will be able to offer, and use, more services around the world. And of course, more global services investment by U.S. companies ultimately translates into more business for FedEx.   Finally, it will be good for the United States economy because the U.S. would enjoy huge advantages from services liberalization around the world. The world’s best American engineers, architects, accountants, health care providers, and of course, transportation companies will all benefit from new opportunities to expand their businesses internationally.

The United States has one of the most competitive service economies in the world; that’s why we exported $526 billion in services with a trade surplus of $168 billion in 2010. We are the number one services exporter in the world with more than second-ranked Germany and third-ranked Great Brittan combined. But U.S. services exports are still well below what they could be. The services sector only exports about 3% of its gross tradable output, while the agriculture and goods sectors export 28% and 18% respectively. This underperformance is largely because international services markets remain heavily restricted and U.S. service suppliers face a wide range of barriers to doing business in overseas markets. Existing rules on trade in services have many shortcomings and they also don’t address many of the issues that services companies face in the 21st Century. Brad Jensen of Georgetown University’s McDonough School of Business estimates that through policy reforms and other initiatives U.S. services could be $860 billion more a year than they are now. This means that the U.S. could create about 3 million additional jobs. 

Services liberalization was one of the three pillars of the World Trade Organization’s (WTO) Doha Round, but that effort has stalled and we have not achieved meaningful, and enforceable, services liberalization in many years. That is why this new initiative carries so much promise. The ISA provides a unique opportunity to negotiate a high-standard services agreement among a group of 20 or so like-minded countries that share in the belief that services liberalization is important to their own economic futures. The ISA would seek to open up new services markets by removing barriers to services investment and it would also strengthen and modernize the rules for services trade to ensure that service companies have a level competitive playing field. The expectation is that once such an agreement becomes a reality, more countries will want to join and eventually it will become the global standard.

FedEx and other U.S. service companies will play an important role in shaping this new initiative going forward.  We look forward to making real progress in 2013 and, hopefully, we have something to celebrate when the WTO meets for its Ministerial meeting in December.


Ralph Carter

Managing Director, Legal, Trade & International Affairs, FedEx Express

As Managing Director of Legal, Trade & International Affairs, Ralph Carter is responsible for FedEx policies on global trade and trade facilitation. Carter’s team advocates for simpler, more open trade rules that reduce barriers and help FedEx customers expand their international business. Carter is a frequent speaker and contributor to international trade events and initiatives including at APEC, the WTO, World Bank, World Economic Forum and the Business 20 (“B20”). Carter’s work has helped FedEx become a respected global leader in international trade policy. Before establishing the FedEx Legal, Trade & International Affairs office in Washington, DC, Carter was Managing Director in the legal department of the Europe, Middle East and Africa FedEx headquarters in Brussels, Belgium.

Before joining FedEx, Carter worked at the United States Department of State, serving as the Special Assistant to the United States Ambassador to the European Union. He is a former member of the State Department’s Advisory Committee on International Economic Policy and was a cleared advisor and staff liaison for the President’s Advisory Committee on Trade Policy & Negotiations (ACTPN).

View all Ralph Carter’s blog posts

Comments

    MayLyn says:

    I’m very thrilled to see that FedEx will be going along with the changes! This is so wonderful to know what is going to be happening in 2013! Keep up the good work FedEx!

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