The Spanish Exporters and Investors Club believes that Spain could benefit from the structural changes that COVID-19 has introduced in international trade, especially through increased trade in international business services and the relocation of the production of strategic goods as part of measures to reduce foreign dependence.
This is the belief of the Committee for Reflection on Internationalization, which in a technical report prepared by Professor Asier Minondo, from the Deusto Business School, assures that “the enormous experiment in remote work” that COVID-19 has entailed will generate, in the medium and long term, the improvement of the competitiveness of foreign companies compared to domestic ones and will favor a significant increase in the international trade of business services.
“Spain has an opportunity to increase its exports of business services thanks to the greater willingness of companies to contract online services. This increase will also help to soften the negative impact that the slow recovery in tourism revenues has had on the trade balance,” says Professor Asier Minondo.
This probable advance of Spain in international trade in services would be favored by the good position of Spanish companies in this segment. In fact, in the period 2013-2019, exports of other business services grew in Spain by 7.5 % annually, a higher percentage than that achieved for services as a whole, 6.2 %, and goods, 3.6 %. In addition, during this period, Spain gained share in the international market for business services exports.
On the other hand, the relocation of value chains to geographically closer points, with the consequent reduction in transport costs and a greater capacity for companies to react to changes in demand, could also benefit Spain, since it has competitive wages, a skilled workforce and good infrastructure. “The measures to tackle dependency that are being articulated at the EU level are likely to increase trade in strategic products between EU member countries and raise the weight of this region in Spain’s international trade,” says Minondo.
In the new context for international trade that the pandemic creates, the document of the Committee for Reflection on Internationalization recommends that, when designing their internationalization plans, companies should prioritize the availability of qualified workers and choose the destination and the service in which they are most competitive, above factors such as size. It also considers it important that the European Union’s trade policy continues to promote regional agreements that reduce regulatory barriers to the international supply of services.
Finally, it warns the European Union authorities that, in designing their policies to promote strategic technologies and the reduction of vulnerability in certain sectors, they should not repeat the sectoral bets in all countries. “Each EU country should specialize in those sectors or stages of the production process in which it already has a high degree of competitiveness. In the case of Spain, there are clear advantages in the pharmaceutical and renewable energy sectors,” says Minondo.