Determinants of Services Trade Agreement Membership
60 Pages Posted: 1 Jul 2018
Date Written: June 2018
Since about a decade, we have seen a surge in interest as well as in the use of services preferentialism and unilateral services regulations. This paper provides an economic explanation of services regulation and services preferentialism, including their interaction. The paper derives hypotheses based on a numerical welfare analysis where tradable services are treated as a secondary (produced) input in the production of tradable goods. Apart from hypotheses on the emergence of services trade agreements (STAs), the paper derives ones on the stringency of unilateral services provision- a general services trade restrictiveness. For instance, one of the hypotheses is that services trade restrictiveness is endogenous, and it is aligned with economic fundamentals. Another hypothesis suggests that countries are more likely to participate in STAs if the partners' general, unilateral services trade restrictiveness is more similar to theirs. These and other hypotheses are supported by data.
Keywords: Services trade agreements; Services trade restrictiveness; Preferential trade liberalization; Services trade; Economic determinants of trade liberalization
JEL Classification: F10; F13; F15
Suggested Citation: Suggested Citation