Chile, host economy of APEC 2019, hosted a services summit on the sidelines of the APEC 3rd Senior Officials’ Meetings in Puerto Varas, Chile, to spotlight the potential of the services sector in strengthening regional integration and explore new opportunities to make the region more friendly for services trade.
After the endorsement of the APEC Services Competitiveness Roadmap in 2015, economies have ramped up efforts to help liberalize the sector. More economies are adopting the recently completed APEC Non-Binding Principles for Domestic Regulation of the Services Sector. The APEC Group on Services is also proposing an APEC index of regulations related to services trade. The pilot of the project currently looks at 300 laws, regulations, and other relevant legal instruments affecting 4 economies. A review of the databases is in progress.
Trade in services has a higher value than trade in goods when measured in value-added terms. That means that in APEC, services account for at least 60% of the region’s GDP. Many economies view services as their most important economic sector, accounting for the bulk of new investment flows.
Yet the sector contributes only a fraction of the region’s exports. Less trade restrictive measures would enable the services sector to expand. Restrictive regulations in transport and logistics, for example, raise services costs by an average of 20 percent – costs that are transferred to consumers and businesses. Other byproducts are lower and less diverse export volumes. In contrast, more open markets would incentivize smaller firms to compete and thrive.
Chile exemplifies the opportunities presented by the services sector. “In 2018, services represented 67 percent of Chile’s GDP, making it our most important economic activity,” said Rodrigo Yanez, Chile’s Vice Minister for Trade. “But services represented only a 12 percent share of Chile’s total exports, which shows the untapped potential that we have yet to exploit,” he added.
Chile is carrying out multiple initiatives to foster growth. In the last year alone, services-exporting businesses have increased from 212 firms to 638 companies. The next step? To work with other economies in reducing barriers to cross-border flows. “We still have one more year left until we reach the deadlines agreed upon by our leaders in Bogor. The services summit is central to this final push, putting front and center the different areas we believe can be advanced, and laying the groundwork for future work,” said Vice Minister Yanez.
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