Reciprocity Across Modes of Supply in the World Trade Organization: A Negotiating Formula

19 Pages Posted: 20 Apr 2016

See all articles by Aaditya Mattoo

Aaditya Mattoo

World Bank - Development Research Group (DECRG)

Marcelo Olarreaga

University of Geneva; Centre for Economic Policy Research (CEPR)

Date Written: June 2000

Abstract

If negotiations on trade in services at the World Trade Organization are to advance liberalization beyond levels undertaken unilaterally and lead to more balanced outcomes, reciprocity must play a greater role in negotiations. This may be facilitated by the use of negotiating rules that establish credible links across sectors and modes of delivery.

Negotiations on trade in services at the World Trade Organization (WTO) have so far produced little liberalization beyond levels countries have undertaken unilaterally. One reason: limited application of the traditional negotiating principle of reciprocity.

In particular, participants have failed to exploit the scope of the services agreement (GATS) for the exchange of market-access concessions across different modes of supply - cross-border delivery and the movement of capital and workers.

Using the Heckscher-Ohlin-Vanek framework, Mattoo and Olarreaga propose a negotiating formula that generalizes the fundamental WTO principle of reciprocity to include alternative modes of delivery.

Adoption of this formula as a basis for negotiations could bring greater commitments to liberalization on all modes of delivery, producing substantial gains in global welfare and more balanced outcomes.

This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to improve trade policy in goods and services. The authors may be contacted at amattoo@worldbank.org or molarreaga@worldbank.org.

Suggested Citation

Mattoo, Aaditya and Olarreaga, Marcelo, Reciprocity Across Modes of Supply in the World Trade Organization: A Negotiating Formula (June 2000). World Bank Policy Research Working Paper No. 2373. Available at SSRN: https://ssrn.com/abstract=630743

Aaditya Mattoo (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

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HOME PAGE: http://econ.worldbank.org/staff/amattoo

Marcelo Olarreaga

University of Geneva ( email )

40 Boulevard du Pont-d'Arve
Genève, CH - 1205
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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