Mattoo, Aaditya; Sauvé, Pierre --- "The preferential liberalization of services trade: economic insights" [2014] ELECD 333; in Sauvé, Pierre; Shingal, Anirudh (eds), "The Preferential Liberalization of Trade in Services" (Edward Elgar Publishing, 2014) 37

Book Title: The Preferential Liberalization of Trade in Services

Editor(s): Sauvé, Pierre; Shingal, Anirudh

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781782548959

Section: Chapter 2

Section Title: The preferential liberalization of services trade: economic insights

Author(s): Mattoo, Aaditya; Sauvé, Pierre

Number of pages: 31

Abstract/Description:

This chapter takes stock of the most recent wave of PTAs with a view to informing some of the policy choices developing countries face in negotiating preferential agreements in services. The chapter first considers the economics of preferences in services and asks whether services trade differs sufficiently from trade in goods as to require different policy instruments and approaches in the context of preferential liberalization. The chapter discusses whether and how PTAs in services allow deeper forms of regulatory cooperation to occur and highlights the importance for third countries of multilateral disciplines on PTAs and the criteria suggested by economic theory to minimize adverse effects on non-members.While there is a large literature on the costs and benefits of integration agreements on trade in goods, there is hardly any analysis of the implications of such agreements in services. Such a gap is surprising given the strong growth witnessed since the mid-1990s in the number of preferential trade agreements (PTAs) featuring detailed disciplines on trade and investment in services. If all trade agreements can of essence be likened to "incomplete contracts", then the incipient multilateral regime for services is arguably the most incomplete of all. This greatly heightens the salience of studying the relationship between preferential and multilateral regimes for services trade. This chapter takes up this challenge by considering a number of questions - both theoretical and policy-related - arising from the study of the PTA-WTO divide in services trade. The chapter questions whether the tools of economic analysis developed for studying the effects of preference in goods trade yield meaningful insights in the services field. Regional and bilateral attempts at developing trade rules for services continue to parallel efforts at framing similar disciplines in the WTO, under the aegis of the GATS. For this reason, regional and multilateral efforts at services rule-making are closely - indeed increasingly - intertwined processes, with much iterative learning by doing, imitation, and reverse engineering. Experience gained in developing the services provisions of PTAs has built up negotiating capacity in participating countries, providing expertise available for deployment in a multilateral setting.