Does your company plan to export services outside the EU? This section helps you understand if your company is ready for exporting and outlines the different steps of the export process.
4 Steps to Export a Service
Before doing so, check whether your company is ready:
Before you continue, consider the questions above carefully and discuss them within your company to decide whether you are ready to export your services to non-EU countries, or which steps you need to take to prepare yourself to do so.
There are typically four different ways to export your service to a market outside the EU (also called ‘modes of supply’). These are defined in an international agreement, namely the General Agreement on Trade in Services of the World Trade Organisation. Cross-border supply of services (Mode 1):
If your company is based in one country and supplies services to a customer in a different country, this is called cross-border supply. Only the service crosses the border. This type of service is often supplied via online portals, phone or email.
A consulting company in Germany provides economic analysis reports to a client company in India. Other examples of services that are often exported through cross-border supply include:
Consumption of services abroad (Mode 2):
If your company is supplying a service in your domestic market to a foreign customer, this is called consumption of services abroad. The customer crosses the border and makes use of the service you supply in your market.
A Japanese customer travels to Ireland and stays at a hotel or dines at a restaurant, thus consuming the services in Ireland. Commercial presence abroad (Mode 3):
If your company establishes a presence in a foreign market, this can be referred to as commercial presence abroad. This involves opening a subsidiary, branch or representative office in another country.
A Danish bank opens up a branch in Canada or a French telecoms group decides to open a subsidiary in Australia. Sectors in which this form of service supply is common include:
In general, the establishment or acquisition of a foreign company abroad is called foreign direct investment. When you plan your investment in a foreign market, the country that you want to invest in may apply certain limitations. These depend on its legal framework and can include:
You can contact an investment promotion agency of the country that you want to invest in, a local tax adviser or a lawyer for setting up an investment contract and request information on other obligations of investors in the specific sector.
The Trade Barriers database allows you to search for ‘Investment related barriers’. Such barriers are also displayed in the search results of ‘My Trade assistant’.
If an employee of your company travels abroad to supply a service in a country outside the EU on temporary basis, then you are providing this service via the presence of a natural person abroad. Different types of personnel can supply the service of your company:
In addition to these categories of company personnel, independent professionals that are self-employed fall under presence of natural persons abroad too:
Sectors which often supply services via employees abroad include ICT services, engineering or professional services, or other services which rely on after sales support.
As a general note, the same service can be supplied in different modes:
To export services outside the EU, you should first identify a market and a buyer for your service.
How to select your target markets?Screen potential export markets to assess whether there is demand for your product and consider if your product would be competitive on the export market?
Check the trade statistics of your potential target market. Import statistics can show if the country you want to export to is already importing your service, where the imports come from and if there is already a high supply of your type of service in the market. How to find potential buyers?Once you have selected one or more target markets, the next step is to identify potential trade partners and business contacts. You can find partners and contacts at:
You can also check if you are allowed to sell to the government in your potential export market.
What is public procurement?
The EU often enters into bilateral trade agreements with countries outside the EU.
Check whether the EU has a trade agreement with the country you want to export to in the Markets section. EU trade agreements may cover trade in services in key sectors and often reduce or even eliminate barriers for exports in those sectors. Examples of such key sectors include:
What benefits do trade agreements bring for your foreign direct investmentsIf the EU has a trade agreement in place with the country, the barriers to foreign direct investment may be reduced or even eliminated in certain sectors, and it may include specific investment provisions that legally bind a level of protection for foreign investments.
EU Trade Agreements
What if my service is not covered by an EU agreement?If the EU does not yet have a trade agreement with the country you want to export to or if your sector of interest is not covered by a particular agreement, you should:
check the market access conditions listed under the WTO’s General Agreement for Trade in Services. WTO members list there their barriers to services exports in their schedule of commitments.
You can investigate detailed information on the specific requirements in your selected target market in the market section. Which requirements do you need to check for cross-border supply (mode 1)?
Which requirements do you need to check for consumption abroad (mode 2)?Consumption abroad takes place when the customer travels outside their country and consumes the service that you are providing in your country.
Which requirements do you need to check for commercial presence (mode 3)?Countries outside the EU may have commercial presence requirements or restrictions, which EU exporters should take into account when investing in these countries.
Which requirements do you need to check for the presence of natural persons (mode 4)?Exporting a service very often requires the temporary stay of your employees abroad in the target market to actually supply the service. For instance:
Requirements to investigate include the following:
When you supply services to non-EU countries you also need to check what tax regulations apply. This includes: Different tax regulations may apply in your export market. Some services may be subject to exceptions depending on the country that you want to export to, for example if your company has a permanent presence in that country. Where can you find more information?
|