French international trade in services by mode of supply

Rafael Cezar and Gwenaëlle Fegar

Quarterly selection of articles - Bulletin de la Banque de France, 2018, issue 49, 25-40

Abstract: This study documents French international trade in services broken down by the four modes of supply defined by the General Agreement on Trade in Services (GATS): cross-border supply (mode 1); consumption abroad (mode 2); commercial presence (mode 3); and presence of natural persons (mode 4). When all modes of supply are taken into consideration, sales to non-residents (exports) exceed purchases of foreign services (imports) by over EUR 200 billion, reflecting both competitiveness based on know-how and a specialisation in sectors that require a local commercial presence. However, the balance of trade in services (covering modes 1, 2 and 4), which is slightly in surplus at EUR 6.5 billion for the first nine months of 2017, reflects a degree of “territorial competitiveness” that is insufficient to ensure a stable current account balance. The third mode of supply (commercial presence), measured on the basis of statistics on foreign affiliates, predominates and accounts for 59% and 45% of French exports and imports, respectively. The majority of transport, banking and insurance, and computer, information and telecommunication service exports fall within mode 3. In order to gain a comprehensive picture of the integration of French services in the global economy, this study also assesses “indirect exports”, i.e. services for use in the production of exported goods. The hierarchy of France’s key trading partners changes when all the modes of supply are considered, with the United States supplanting the United Kingdom and Germany as France’s main import and export partner.

Keywords: international trade in services; modes of supply; FATS; trade in value added (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:quarte:2018:49:03

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