We know laboratories as service providers to other sectors in the same economy. Testing laboratories check compliance, e.g., whether foodstuffs meet the requirements of hygiene standards or do not contain excessive loads of heavy metals. Clinical laboratories test people and animals for certain diseases. Calibration laboratories ensure that business partners can rely on each other’s measurement results.

Frequently, we do not consider laboratories an essential economic sector itself. International market studies show that the laboratory sector generates around 100 billion US dollars annually. [1] This is equivalent to the entire economic output of a country like Ecuador (106 billion GDP in 2021). [2] Laboratories are one of the most dynamic sectors of the economy.

The contribution of laboratories to a country’s employment is also significant. In clinical laboratories in the United States of America alone, some 500,000 people are employed. [3] Worldwide, we can assume several million laboratory personnel. These jobs require scientific expertise and offer attractive employment opportunities for the most qualified people.

Traditionally, laboratories operate in a local and national context. With the globalisation of trade, the laboratory sector is becoming increasingly internationalised. Multinationals such as Bureau Veritas, Eurofins, Intertek, SGS, TÜV Rheinland or TÜV SÜD benefit from this development and have a global presence. In doing so, they often buy local laboratories to expand their offerings.

Smaller private laboratories wishing to maintain their independence face the strategic challenge of specialising in niche markets or increasing their scope in cooperation with other laboratories. One example is the Guatemalan Export Laboratories Commission (AGEXPORT), which is working together to export its services. With the support of the European Union in the framework of the More Competitive MSMEs and Cooperatives project, AGEXPORT has recently developed a diploma course on export management of laboratory services.

In World Trade Organisation terminology, this is considered the export of services. The basis is the Global Agreement on Trade in Services (GATS) rules of 1995. As for trade in goods, the WTO established basic rules for trade in services, reducing unnecessary trade barriers and following the principle of non-discrimination. [4]

In the export of services, the WTO distinguishes between modalities. In all cases, the service provider and the user of the service come from two different countries:

• Mode 1: In cross-border trade, the service provider transmits his service by mail or electronically to the user in the other country. Examples are banking services or architects’ construction plans.
• Mode 2: In the case of consumption abroad, the consumer travels to where the service provider provides his service. An example of this is tourism, including health tourism.
• Mode 3: In this case, the service provider establishes a branch in another country through which he provides the service locally. Examples are branches of insurance groups and banks abroad, and hotel chains.
• Mode 4: The service provider sends personnel to another country. Examples are accountants, doctors and teachers.
• Mode 5 is not covered by the GATS and refers to exports of goods in which services are included. [5] Examples are research and development, design, and engineering services. The problem with these “services-in-boxes” exports is that customs rules apply to them as goods, making it difficult to export services.

Several of these modalities are relevant to the export of laboratory services. When a client sends a laboratory sample abroad for testing, this is cross-border trade (mode 1). The testing service is provided abroad, and the test result is usually transmitted electronically.

Large laboratory groups also use mode 3, establishing branches in their customers’ countries. On the other hand, mode 4 of dispatching auditors and inspectors is used for different types of conformity assessment (and even for the accreditation of laboratories itself). Finally, the shipment of an instrument for calibration abroad, of a food sample or a certified reference material, falls under mode 5, where the service is closely linked to a physical product.

So far, there is little information and research on the internationalisation of laboratory services. A positive exception is a programme supporting the Colombian economy’s diversification and internationalisation. One study identified the following obstacles to the export of laboratory services:

• Lack of export experience 
• Lack of training in internationalisation, including cost accounting 
• The complex and time-consuming process of importing and exporting samples (including the risk of damage to samples during customs clearance) 
• Lack of knowledge of equipment and sample packaging regulations and restrictions.
• Lack of partnerships to facilitate cooperation between public and private institutions. [6]

At the same time, the study drew attention to several strengths that enable laboratories to export their services:

• Extensive experience in Colombian laboratories 
• Internationally recognised accreditations 
• Some spare capacity
• Commitment and motivation for internationalisation
• Diversity of sectors covered (although the focus is more on agri-food).
• Take advantage of the wide range of calibration services for different quantities, especially for temperature, volume, mass, humidity, and pressure. [6]

Accreditation is of fundamental importance for the export of laboratory services. The trading partner will only recognise the test result if the laboratory can prove its technical competence and independence through accreditation. The accreditation body itself must be internationally recognised in the field in question (ILAC-MRA signatory).

In Colombia, exporting companies were asked whether they use accredited laboratories to certify their products. Three-quarters of the companies confirmed this. Of these companies, 88% used laboratories in Colombia and 12% abroad (mainly Brazil, China, Germany, and the United States). [7] In this sense, laboratories also compete internationally in their own country.

In conclusion, there is still little information on the internationalisation of laboratory services. To better understand the potential for developing laboratories as an independent knowledge-based sector and to establish promotion programmes accordingly. The Colombian experience shows that the laboratory sector is hardly known to SMEs and export and economic diversification promotion institutions. In this respect, laboratory associations and national accreditation bodies are called upon to address this issue and to sensitise laboratory managers on internationalisation opportunities, as well as funding agencies and international development cooperation on funding needs.

Sources:

[1] Global Industry Analysts (2022) Global Testing Laboratories Industry

[2] World Bank national accounts data and OECD National Accounts data files

[3] Center for Health Workforce Studies (2021): The Clinical Laboratory Workforce in the U.S., Policy Brief, June, University of Washington

[4] Sherry M. Stephenson (2013) Standards and Conformity Assessment as Non-tariff Barriers to Trade, The World Bank Group, Policy Research Working Papers

[5] Antimiani, A. and L. Cernat (2018). Liberalizing global trade in mode 5 services: How much is it worth?, Journal of World Trade 52(1)

[6] DT Global (2022) Programa de Apoyo a la Diversificación e Internacionalización de la Economía Colombiana (Programme of Support for the Diversification and Internationalisation of the Colombian Economy), Report for Colombia Productiva (unpublished), Bogotá.

[7] ONAC (2022) Impact of the recognition agreements obtained by ONAC, in the export exercise or offer of services in an international market, November 2021