Miroudot, Sebastien and Shepherd, Ben (2012): The paradox of “preferences”: regional trade agreements and trade costs in services.
Download (311kB) | Preview
Abstract This paper analyzes the relationship between regional trade integration and trade costs in services industries. The empirical analysis relies, on the one hand, on a dataset of theory-consistent bilateral trade costs calculated for 55 countries over the period 1999-2009 and, on the other hand, on an analysis of services commitments in 66 regional trade agreements to which these countries are parties. Despite the proliferation of services RTAs in the past decade, we find that trade costs are only slightly lower due to the impact of these agreements. In addition, we find that the trade cost reductions that do take place tend to happen before the agreement is signed. This mechanism is consistent with countries using services RTAs as a way of “locking in” reforms. Finally, we find that the preferential margin of services RTAs is quite thin: members and non-members both see slightly lower trade costs when an RTA is signed. We discuss the possible explanations for these findings in terms of the nature of services RTAs and their relationship with regulatory reform in signatory countries. Based on these results, we argue that regionalism in the case of services seems relatively non-discriminatory and does not lead to substantial trade preferences.
|Item Type:||MPRA Paper|
|Original Title:||The paradox of “preferences”: regional trade agreements and trade costs in services|
|Keywords:||Trade policy; Trade in services; Regional trade agreements; services trade liberalization|
|Subjects:||F - International Economics > F1 - Trade > F15 - Economic Integration
F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations
|Depositing User:||Ben Shepherd|
|Date Deposited:||07 Sep 2012 15:57|
|Last Modified:||22 Mar 2017 09:59|
Adlung, R., Miroudot, S., 2012. Poison in the wine? Tracing GATS-minus commitments in regional trade agreements. Journal of World Trade 46 (5), forthcoming.
Adlung, R., Roy, M., 2005. Turning hills into mountains? Current commitments under the General Agreement on Trade in Services and prospects for change. Journal ofWorld Trade 39 (6), 1161–1194.
Anderson, J. E., van Wincoop, E., 2003. Gravity with gravitas: A solution to the border puzzle. American Economic Review 93 (1), 170–192.
Bergstrand, J., Egger, P., 2007. A knowledge-and-physical-capital model of international trade flows, foreign direct investment, and multinational enterprises. Journal of International Economics 73 (2), 278–308.
Chaney, T., 2008. Distorted gravity: The intensive and extensive margins of international trade. American Economic Review 98 (4), 1707–21.
Chauffour, J.-P., Maur, J.-C. (Eds.), 2011. Preferential trade agreement policies for development. A handbook. The World Bank.
Eaton, J., Kortum, S., 2002. Technology, geography, and trade. Econometrica 70 (5), 1741–1779.
Emch, A., 2006. Services regionalism in the WTO: China’s trade agreements with hong kong and macao in light of Article V(6) of GATS. Legal Issues of Economic Integration 33, 351–378.
Fink, C., Molinuevo, M., 2008. East asian preferential trade agreements in services: liberalisation content and wto rules. World Trade Review 7 (4), 641–673.
Fink, C., Nikomborirak, D., 2007. Rules of origin in services: a case study of five asean countries. Policy Research Working Paper 4130, The World Bank.
Freund, C., 2010. Third country effects of regional trade agreements. TheWorld Economy 33 (11), 1589–1605.
Gormsen, C., January 2011. The declining barriers to foreign direct investment and how to see them, mimeo.
Head, K., Ries, J., 2001. Increasing returns versus national product differentiation as an explanation for the pattern of u.s.-canada trade. American Economic Review 91 (4), 858–876.
Head, K., Ries, J., 2008. FDI as an outcome of the market for corporate control: Theory and evidence. Journal of International Economics 74 (1), 2–20.
Hoekman, B., 1996. Assessing the general agreement on trade in services. In: Martin, W., Winters, L. A. (Eds.), The Uruguay Round and the developing countries. Cambridge University Press, pp. 88–124.
Hornok, C., 2011. Gravity or dummies? the limits of identification in gravity estimations. CeFiG Working Papers 15, Center for Firms in the Global Economy.
Houde, M.-F., Kolse-Patil, A., Miroudot, S., 2007. The interaction between investment and services chapters in selected regional trade agreements. OECD Trade Policy Working Paper 55, OECD Publishing.
Kleinert, J., Toubal, F., 2010. Gravity for fdi. Review of International Economics 18 (1), 1–13.
Limao, N., 2006. Preferential trade agreements as stumbling blocks for multilateral trade liberalization: Evidence for the united states. American Economic Review 96 (3), 896–914.
Marchetti, J. A., Roy, M., 2008. Services liberalization in the WTO and in PTAs. In: Marchetti,
J. A., Roy, M. (Eds.), Opening Markets for Trade in Services. Countries and Sectors in Bilateral and WTO Negotiations. Cambridge University Press, pp. 61–112.
Miroudot, S., Lanz, R., 2008. Measuring bilateral trade in services: A note on the data collected and estimated for the services trade restrictiveness index. Tech. Rep. TAD/TC/SXM(2008)2, OECD.
Miroudot, S., Sauvage, J., Shepherd, B., 2012. Trade costs and productivity in services sectors. Economics Letters 114 (1), 36–38.
Miroudot, S., Sauvage, J., Sudreau, M., 2010. Multilateralising regionalism: how preferential are services commitments in regional trade agreements? OECD Trade Policy Working Paper 106, OECD Publishing.
Novy, D., 2011. Gravity redux: Measuring international trade costs with panel data. CESifo Working Paper Series 3616, CESifo Group Munich.
Pomfret, R., Sourdin, P., 2009. Have asian trade agreements reduced trade costs? Journal of Asian Economics 20 (3), 255–268.
Sauvï¿oe, P., Mattoo, A., 2011. Services. In: Chauffour, J.-P., Maur, J.-C. (Eds.), Preferential trade agreement policies for development. A handbook. The World Bank, pp. 235–274.
Sauvï¿oe, P., Shingal, A., 2011. Reflections on the preferential liberalization of services trade. Journal of World Trade 45 (5), 953–963.
VanGrasstek, C., 2010. The political economy of services in regional trade agreements. OECD Trade Policy Working Paper 112, OECD Publishing.
Walsh, K., 2006. Trade in services: Does gravity hold? a gravity model approach to estimating barriers to services trade. Discussion Paper Series 183, Institute for International Integration Studies.
WTO, 2011. The WTO and preferential trade agreements: From co-existence to coherence. World Trade report 2011, World Trade Organization.