Guide

Exporting and importing services

Legal issues for international trade in services

Different business cultures, legal environments and languages increase the risk of confusion when you trade internationally. It's important to have a clear contract.

With trade in goods, attention often focuses on responsibilities for delivery, set out using internationally recognised Incoterms. Other issues, such as what is being supplied, are usually relatively straightforward.

For trade in services, it's almost the opposite. It can be difficult to specify exactly what services are to be provided, to what standards. It can be helpful to focus on what the desired outcomes are - ie what the service should achieve. This can be part of a service level agreement in the contract. Read more about how to manage overseas suppliers.

There are other important legal issues to consider:

  • The location of supplier and customer can vary, affecting which country's regulations apply.
  • You need to sort out payment issues such as choice of currency and protection against the risk of non-payment.
  • You may need to take action to protect your intellectual property in other countries.

International trade in tangible products has defence mechanisms in place under The General Agreement on Tariffs and Trade (GATT). GATT defines the rules for a complete trading system, including protection mechanisms, tariffs and trading terms. As they are universally in use and transparent, they make it easier to determine where disputes must be settled.

The WTO Agreements also include an agreement on trade in services - the General Agreement on Trade in Services (GATS).

The European Union (EU) Services Directive removes many barriers and open the internal market within the EU to service businesses established in a member state.