The growing role of services inputs in manufacturing exports (‘services in boxes’) has led to a proposal for a new modality of exporting services (mode 5 services) beyond the four modes of supply in the General Agreement on Trade in Services (GATS). For the vast majority of WTO members the significance of mode 5 services is considerable, both in exports and imports. However unlike traditional GATS services trade, mode 5 services ‘in boxes’ pay tariffs.
This article estimates that the global GDP gains from liberalizing mode 5 services at multilateral level could reach up to EUR 300 billion by 2025 and world trade could increase by over EUR 500 billion. The article also examines the interplay between mode 5 services trade and the growing importance of future technological developments (e.g. software, digitalization, the Internet of Things).
Our preliminary set of results shows that a Mode 5 Services Initiative is important not only because of the positive impact it would have on global trade flows but also because it would facilitate trade-led technological progress in all regions of the world.Journal of World Trade