To better understand the “how” and “where” of EU service exchanges, Eurostat is developing experimental statistics on the international supply of services (ISS) by modes of supply (MOS). Based on four modes (mode 1, cross-border supply; mode 2, consumption abroad; mode 3, commercial presence; and mode 4, presence of natural persons), statisticians can analyze EU trade competitiveness by comparing the ratio of net trade (exports minus imports) to total trade (exports plus imports).
Taking legal services as an example, this would mean that legal advice provided to the client abroad through electronic channels is mode 1, but if the client from abroad comes to the lawyer’s office is mode 2. If the lawyer establishes an affiliate abroad to provide legal services is mode 3 and if the lawyer goes abroad to provide a legal service to a client then it’s mode 4.
The main sources for modes of supply data are the international trade in services (ITSS) statistics and foreign affiliates statistics (FATS). The complete methodology is described in the Eurostat modes of supply compilers guide.
Commercial presence is the main service mode
The EU’s total exports of services to countries outside the EU reached €2 429 billion (all four modes taken together) in 2018.
Three fifths (59% or €1 439 billion) of the EU’s total exports of services are supplied via mode 3, meaning by a service supplier of an EU country establishing a commercial presence in the territory of a non-EU country. Exports performed through modes 1, 2 and 4 (computed from the ITSS) account for the remaining two fifths or €990 billion (sum of modes 1, 2 and 4).
In terms of imports from countries outside the EU, mode 3 (imports via foreign affiliates) is again the most prominent mode accounting for 58% of the total EU imports from non-member countries or €1 309 billion. The imports through modes 1, 2 and 4 reach €935 billion (42% of the total).
For more information:
Mode 1 – cross-border supply: from the territory of one country into the territory of another country.
Mode 2 – consumption abroad: in the territory of one country to the service consumer of another country.
Mode 3 – commercial presence: by a service supplier of one country, through a commercial presence in the territory of another country. The Foreign affiliates statistics (FATS) framework is designed to provide information on the activities of enterprises located in foreign markets.
Mode 4 – presence of natural persons: by a service supplier of one country, through the presence of natural persons of that country in the territory of any other country.
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