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The services sector holds the key to unlocking economic recovery, job creation, and future growth.
This compelling message was championed by a diverse group of business, government, and academic leaders at the recent Global Services Summit in Washington, D.C.
On the eve of the Summit, I wrote an editorial pointing out that the services sector has been somewhat overlooked as an engine of global growth and development. Here are 5 things you should know about the global services sector and the role it can play in driving the economic recovery:
1. Services Propel the World Economy. The services sector accounts for more than two-thirds of worldwide economic activity. This may come as a surprise, but not when you consider how services touch our lives everyday. If you text, ship packages, shop or sell online, then you are benefitting from services.
2. Untapped Potential. While services fuel more than 65 percent of global economic activity, they only account for about 20 percent of world trade. This imbalance shows that there is tremendous room for growth but it also highlights the fact that there is a lot of work to do to spark services trade.
3. Trade Barriers Pervasive. Services sector trade has yet to reach its potent due to pervasive trade and regulatory barriers erected over time to protect narrow interests. Anti-competitive practices, disjointed regulatory regimes, inefficient customs procedures, and restrictions on foreign investment are just a few examples of the obstacles holding back services trade. Sustainable growth and the creation of good jobs depends on accelerating resilient and high-potential sectors such as services. We should not allow protectionist measures to slow us down. According to the World Trade Organization (WTO), trade restricting measures have outpaced trade facilitating measures by 2:1 in the last year.
4. Global Trade Deal Needed. In 2001, the WTO started the “Doha Round” of multilateral negotiations to break down trade barriers around the world – including services trade barriers. After 8 years, these negotiations have yet to produce the results necessary to meaningfully increase services trade. Fueling job growth and economic prosperity around the world requires an ambitious, balanced, and expeditious conclusion to the Doha Round.
5. Services Negotiations Can’t Wait. As the Doha Round have failed to make progress, services advocates have been repeatedly told to wait for negotiations to progress in the other two market access sectors – agriculture and manufacturing. Significant disagreements, however, on major issues in those two areas have caused the talks to break down on a number of occasions. Whatever gains are achieved in the agriculture and manufacturing negotiations can only be maximized with a robust opening of the services sector.
Let me leave you with one final thought. With cooperation and a focus on mutual benefits, I firmly believe the services sector and its employees represent the best chance to fuel economic growth, ignite development, create jobs and strengthen the world economy.
Michael L. Ducker is EVP and Chief Operating Officer at FedEx Express.
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