A WTO information note describes how far-reaching travel bans in the early months of the COVID-19 pandemic “have given way to more fine-tuned policies” that enable essential workers to travel.
Referencing the General Agreement on Trade in Services, the note describes how the four modes of services trade have been impacted by cross-border mobility restrictions.
The authors highlight that international cooperation efforts have served to mitigate harmful economic impacts, but caution that restarting international mobility of individuals is unlikely to proceed in a linear fashion.
The World Trade Organization (WTO) has issued an information note that articulates how temporary border closures and travel restrictions associated with the COVID-19 pandemic have affected goods and services trade.
The note describes how far-reaching travel bans in the early months of the virus’s spread “have given way to more fine-tuned policies” that enable essential workers to travel and create “travel bubbles” among partners such that quarantines are not considered necessary. Despite these changes however, the note emphasizes that barriers to mobility have significantly impacted the tourism and education services sectors, as well as goods trade.
The authors underscore that international trade and investment have always relied on the cross-border mobility of individuals. Referencing the General Agreement on Trade in Services (GATS), which defines trade in services in terms of four modes of supply, the information note describes how each mode has been impacted by cross-border mobility restrictions, with the caveat that these modes are often bundled and feature varying degrees of substitutability.
For economies dependent on tourism, the sector has turned from a source of growth into a vulnerability.
The note finds the most severe impacts on services traded through consumption abroad (GATS mode 2). This mode includes services trade that requires physical proximity between producers and consumers (e.g. tourism and in-person higher education). Mobility-related measures have shut down the tourism sector in developed and developing economies alike, and for the latter, have “turned a source of growth into a vulnerability.”
On services traded through the movement of natural persons (GATS mode 4), which includes services that rely on cross-border movement of individuals (e.g. professional and other business services), the note describes COVID-19’s impacts as “devastating.” Noting that the majority of business travel has ceased, according to a study conducted in May 2020 by the Global Business Travel Association (GBTA), the authors report that given the proliferation of videoconferencing tools, it is difficult to gauge whether online supply presents “a longer-term substitution of mode 4 trade.”
While the information note finds that the remaining two GATS modes are not as significantly impacted, services provision through the establishment of a commercial presence abroad (GATS mode 3), or from one country to another through the online provision of services (GATS mode 1), individual mobility remains a factor. Regardless of mode, the authors expect that face-to-face interactions will continue to play a role in services provision.
The note also highlights that international cooperation efforts have served to mitigate harmful economic impacts, and that lessons learned in recent months can “help WTO members foster greater resilience” to future shocks. Information exchange, the note emphasizes, will be critical to identifying ways of protecting public health while minimizing “trade-distortive effects.”
Looking ahead, the note projects that restarting international mobility of individuals is unlikely to proceed in a linear fashion. Reemphasizing the importance of a collaborative approach, the note concludes that measures impacting transnational mobility have “obvious cross-border spillovers” and thus that domestic action must be conducted in a cooperative fashion. [Publication: Cross-border Mobility, COVID-19 and Global Trade] [WTO News Release]