SERVICES: SECTOR BY SECTOR
Construction and related engineering services
The construction industry accounts for around one-tenth of the world's GDP and 7 per cent of employment.
Construction and related engineering services includes construction work for buildings and civil engineering, installation and assembly work, building completion and finishing work. Architectural and engineering services are classified as part of “professional services”.
Developments in the sector
World construction output grew by 3 per cent in 2007, to reach US$ 4.7 trillion, compared with almost 5 per cent growth in 2006. The US market still dominates the global scene as the largest national construction market, representing 25 per cent of the world total. Japan is second, followed by China. After this comes Germany, followed by Italy, France, the United Kingdom, Brazil, Spain, Korea, Mexico, Australia and India.
Developing country markets have been the most dynamic in recent years. China and India stand out, with spending on construction growing annually by more than 8 per cent. Next in line are Korea, Brazil and Mexico. Growth is are also impressive in Russia and the United Arab Emirates.
The construction industry is relatively fragmented, with few dominant players in most sectors, whether by industry or country. This situation will only slowly evolve, with a handful of very large firms and a predominance of small and medium-sized players serving niche markets.
Current commitments and exemptions
For consolidated information on countries’ commitments and exemptions on construction and related engineering services go to the services database. If you are seeking the commitments of a specific WTO member, go to “Jump to a specific sector for a given Member”, select construction and related engineering services from the sector dropdown list, select the Member of interest and click “go”. To see a table showing which Members have made commitments in construction and related engineering services choose “See which Members have made commitments in a specific sector”, select Construction and related engineering services and click “go”.
Construction and related engineering services are included in the new services negotiations, which began in January 2000. The principles of trade in construction services are contained, as for all services, in the General Agreement on Trade in Services (GATS).
In the first years of the services negotiations, various negotiating proposals on construction services were submitted, by both developed and developing members (i.e. the European Communities, Australia, Korea, New Zealand, Brazil and Cuba). There were also multi-sectoral proposals by Chile, Kenya and Japan.
Proposals on construction and related engineering services
The most important negotiating objectives for construction services, as identified by members in the run-up to the Hong Kong Ministerial Conference, included the elimination of the following barriers (TN/S/23):
- foreign equity limitations
- joint venture and joint operation requirements
- discriminatory licensing or registration procedures
- restrictions on the types of projects that can be undertaken by foreign service suppliers
- restrictions on the movement of natural persons
Following the Hong Kong Ministerial Declaration of December 2005, a group of developing and developed-country members submitted a collective request on construction and related engineering services. The request focused on commitments under Mode 3 (a foreign company setting up subsidiaries to provide services in another country), addressing such restrictions as foreign equity limitation, restriction on the types of commercial presence, discriminatory procedures, and restrictions on the types of projects for foreign services suppliers (TN/S/M/19, paragraph 41).
Search Documents Online
These links open a new window: allow a moment for the results to appear.
- Secretariat background paper on construction and related services (Document code S/C/W/* and keyword “construction and Background Note”) > search > help
You can perform more sophisticated searches from the Documents Online search facility by defining multiple search criteria such as document symbol (i.e. code number), full text search or document date.
Some useful links and other resources
UNCTAD (2007), “Managing the Request-Offer Negotiations under the GATS: Construction & Related Engineering Services”, 6 June 2007.
UNCTAD (2000), “Regulation and Liberalization in the Construction Services Sector and its Contribution to the Development of Developing Countries”, Note by the UNCTAD Secretariat, TD/B/COM.1/EM.12/2, 12 September 2000.
U.S. International Trade Commission (USITC) (2007), “Recent Trends in U.S. Services Trade — 2007 Annual Report”, USITC, Publication no. 3925. Washington, DC: USITC, June 2007, Chapter 3.
Engineering News Record (ENR) (2007), “The 2007 Top 225 Global Contractors”, McGraw-Hill Construction, 20 August 2007.
Davis Langdon & Seah International (2008), “World Construction 2007–2008”.