The Economic Structure of International Trade-in-Services Agreements
32 Pages Posted: 2 Jun 2020 Last revised: 3 Jun 2020
Date Written: August 1, 2019
The existing economics literature on international trade agreements focuses on tariff agreements covering trade in goods, and offers an explanation for core features of the GATT. Tarif'fs play almost no role in services markets, however, and the existing models cannot account for the dramatically different approach to trade liberalization in agreements such as the WTO General Agreement on Trade in Services (GATS). We develop a model through which key features of GATS, including its emphasis on "deep integration" sector-by-sector negotiations on behind the border policy instruments ñ can be understood. And we use this model to suggest that there may also be a middle ground for services trade liberalization between the GATS deep-integration approach and the traditional border-policy focused "shallow integration" approach of GATT.
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