Sauvé, Pierre; Shingal, Anirudh --- "Reflections on the nature of preferences in services" [2014] ELECD 341; in Sauvé, Pierre; Shingal, Anirudh (eds), "The Preferential Liberalization of Trade in Services" (Edward Elgar Publishing, 2014) 401

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 10

Section Title: Reflections on the nature of preferences in services

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

Number of pages: 12

Abstract/Description:

This chapter takes stock of the forces that lie behind the recent rise of preferentialism in services trade. Its initial focus is on a number of distinguishing features of services trade that sets it apart from trade in goods and shapes trade liberalization and rule_making approaches in the services field. The chapter then documents the nature, modal and sectoral incidence of the trade and investment preferences spawned by PTAs in services. It does so with a view to addressing the questions of whether and how the preferential treatment of services trade is truly preferential in character and effect. Finally, the chapter addresses a number of considerations arising from attempts to multilateralize preferential access and rule_making in services trade.We consider first the salient features of services trade that distinguish it from trade in goods and have a bearing on the key issues under discussion in this chapter. For starters, and in marked contrast to goods trade, the bulk of services trade involves both trade and factor flows. There are four modes by which services can be supplied internationally and, unlike goods trade, trade in a broad range of services requires the physical proximity (and often simultaneous interaction) of the producer and the consumer for trade to materialize. The characteristics depicted above in turn help explain the nature of restrictions imposed on services trade and thus the means of according preferential treatment on, inter alia, the value of services output, the number of service suppliers, the amount of foreign equity permitted, the type of legal structure required for market entry purposes, the technical standards, licensing and qualification requirements applied, as well as the conditions of eligibility for service sector subsidies. Given the fact that domestic regulation and not border taxation measures in the form of tariffs constitutes the prime negotiating currency in services trade, there are strong grounds to believe that the classic means of estimating the welfare consequences of preferential market opening and distinguishing the trade-creating and trade-diverting properties of PTAs pioneered by Jacob Viner is almost assuredly of lesser analytical relevance in the services field.