WTO: Global services trade hit hard by travel curbs

Covid-19-induced travel restrictions have had a devastating impact on global services trade, said a report by the World Trade Organization (WTO).

This was despite Mode 4 trade, which allowed crossborder movement of individuals, accounting for just 3 per cent of world services trade, said the report.

This mode of supply is important for certain members and certain sectors, such as professional and other business services, it said in the report, titled ‘Cross-border Mobility, Covid-19 and Global Trade’.

“For instance, in 2017, even though the dominant export mode was cross-border supply (Mode 1), some 13 per cent of India’s exports of information technology (IT) services, which overall totalled over $52 billion in value, were exported through the deployment of IT professionals abroad,” said the report.

With the limited exception of individuals working in ‘essential’ sectors, all such trade that relies on cross-border movement of individuals has effectively come to a halt, it said. There is also an impact of visa restrictions on both trade and foreign direct investment (FDI), WTO said.

For instance, with unilateral border restrictions, bilateral trade and FDI have been estimated to fall 19 and 25 per cent, respectively. If mobility restrictions are symmetrical, the negative effect on trade is larger, at up to 25 per cent, while the impact on FDI is essentially the same as with unilateral restrictions. So far as other services are concerned, the most obvious impact is on the mobility of service consumers, or Mode 2 of the General Agreement on Trade in Services.