Trade in Services and Regional Trade Agreements: Do Negotiations on Services Have to Be Specific?

Abstract

Trade in services has been on a substantial positive trend since the last decades, and the number of Regional Trade Agreements (RTAs) in force has increased regularly overtime. However, negotiations on services remain hesitant even at the bilateral level. Classifying an RTA according to its degree of liberalization in services allows to account for "depth" and heterogeneity issues amongst RTAs. I estimate a gravity equation using panel data covering the period 1999-2007, including bilateral and country-and-time fixed effects. The main results are: i) amongst RTAs, only the economic integration agrements (EIAs) have a significant effect on trade in services; ii) the deeper the agreement is, the more intra-trade the signatory countries have; and iii) EIAs are "phased-in," as the economic effect of the agreement fully appears after 2 years.

Keywords: Trade in Services, Negotiations, Gravity Model

JEL Classification: F15