The Behavioral Dynamics of Positive and Negative Listing in Services Trade Liberalization: A Look at the Trade in Services Agreement (TiSA) Negotiations
Martin Roy and Pierre Sauvé, eds. (2015), Research Handbook on Trade in Services, London: Edward Elgar
32 Pages Posted: 21 Apr 2015 Last revised: 5 May 2015
Date Written: April 15, 2015
From a standard rational choice perspective, the choice architecture of an international trade in services liberalization scheme as structured around either positive or negative listing should not have any appreciable effect on the depth and breadth of commitment. In contrast, behavioral economics, in particular Prospect Theory and phenomena such as framing effects and status quo bias, suggest that a negative list approach would be more conducive to economic liberalization. Several additional complicating factors, such as sectorial considerations, negotiating asymmetries and transaction costs, preclude this hypothesis from being subjected to reliable empirical testing. However, a case study of the currently ongoing negotiations towards a plurilateral Trade in Services Agreement (TiSA), reveals that trade diplomats are acutely attuned to the potential importance of such negotiated ‘choice architecture’, and that behavioral effects can have significant influence on negotiations. This demonstrates that behavioral dynamics, especially compromise effects, are a significant part of international trade talks, at least with respect to services trade.
Keywords: WTO, Trade in Services, international law, negotiations, Trade in Services Agreement, behavioral economics, framing effects, compromise effects
Suggested Citation: Suggested Citation