Determinants of Services Trade Agreements: Regulatory Incidence and Convergence

Abstract

Given the rise of services preferentialism in the last decade and the importance of domestic regulation for services trade, this paper examines the role of regulatory incidence and convergence as determinants of services trade agreements (STAs). Our results suggest that regulation is an important determinant of STA membership. They also suggest that geography, common institutions and pre-existing trade matter more than economic size and factor endowments for addressing regulatory incidence and convergence in services negotiations. Finally, we find that countries displaying greater regulatory convergence and less restrictive regulation are also more likely candidates for reciprocal services liberalization.

Keywords: Services trade agreements, Economic determinants, STRI, Regulatory convergence

JEL Classification: F10, F13, F15