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Trade in services is key to recovery

As the largest sector in the world, services account for more than two-thirds of economic activity — and without services, global trade would freeze up, economic growth would stagnate and development gains would be lost. Services also make up an important part of our everyday lives. If you own a cell phone, use a bank, ship packages, draft up a contract, insure property or sell on e-Bay, you are relying on services.

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And while services fuel more than 65 percent of global economic activity, they only account for about 20 percent of world trade. This goes to show that the service sector has yet to scratch the surface of its vast potential.

From my perspective, this untenable imbalance arose from the pervasive trade and regulatory barriers that stifle services trade around the world. Take for example the express delivery industry, which FedEx represents. The restrictions imposed by some countries that limit the services we can provide our global customers include anti-competitive practices of government-owned or -authorized monopolies, inefficient customs procedures, cumbersome licensing requirements, and restrictions on foreign investment, among others. Moreover, countries often adopt regulatory regimes that conflict with those of its neighbors, further burdening the flow of goods and services across borders. And these are just some examples from the express delivery industry. Even more challenges are faced by other companies working to serve customers on a global basis.

Leaders at the Global Services Summit are coming together at a crucial time. In the midst of the global economic downturn and a precipitous decline in global trade and investment, the public and private sectors must take action to help unlock the growth potential of the service sector for both developed and developing countries alike.

And if we as a global community can do a better job of tapping into this enormous potential, I believe that service businesses and those they employ can make a significant contribution to the strength and duration of an economic recovery. We see signs of a slow recovery, but to achieve sustainable growth, we must accelerate trade and investment in resilient and high-potential areas such as services rather than allow protectionist measures to slow us down.

Of course, a solution will not be delivered overnight at the Global Services Summit. Many of the barriers to services trade have been built over many decades, and they will be difficult to dismantle. Every day at FedEx, we see firsthand how these barriers limit the opportunities for our customers’ growth and prosperity — whether they face trade finance restrictions, inefficient customs regimes, licensing limitations, technology interference, insurance challenges, or other obstacles preventing fair and open competition. These barriers produce a ripple effect around the world, resulting in fewer market opportunities for businesses and fewer choices for consumers.

What we need now to fuel future job growth and economic prosperity in the U.S. and abroad is a multilateral trade deal. Unfortunately, the Doha Round of negotiations has so far failed to produce meaningful results that would increase services trade. Services negotiators have been told to wait for agriculture and manufacturing negotiations to progress, but those negotiations have been stalled for years. Whatever gains are achieved in the manufacturing and agriculture negotiations can only be fully realized in tandem with the opening of markets in the service sector.

Service businesses and their employees are absolutely, positively vital to the health of the global economy. The Global Services Summit provides a unique platform upon which leaders can map out policies and strategies that will produce real market access, grow our economies and create jobs. In this economic climate, the service sector should not be overlooked. It may be our best hope to lead the world into a meaningful and sustainable economic recovery.

Ducker is president, international, of FedEx Express and the immediate past chairman of the Coalition of Service Industries.