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Estimations of Tariff Equivalents for the Services Sectors

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  • Lionel Fontagné
  • Amélie Guillin
  • Cristina Mitaritonna

Abstract

Methodological issues arising from the estimation of tariff equivalents of barriers to services trade are very relevant for policy. These equivalents are used extensively to compute welfare gains and resource reallocations associated with partial liberalization of the sector; any measurement errors will strongly affect the estimated gains. Using the Global Trade Analysis Project (GTAP) database, we rely on socalled quantity based methods to derive tariff equivalents from a gravity equation estimated at sectoral level for 9 services sectors and 65 countries. We also estimate trade equations for services using cross section data, and improve on the methodology of Park (2002). We investigate whether relying on cross section rather than panel data leads to differences in the estimated equivalents. Finally, we compare the estimations based on reconstructed and actual data. We conclude that although use of partially reconstructed data (such as GTAP) affects the results, the equivalents obtained are good representations of the magnitude of protection for services in the various countries analyzed, although with larger deviations for developing economies.

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Bibliographic Info

Paper provided by CEPII research center in its series Working Papers with number 2011-24.

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Date of creation: Dec 2011
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Handle: RePEc:cii:cepidt:2011-24

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Keywords: MARKET ACCESS; TARIFFS; SERVICES; INTERNATIONAL TRADE;

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References

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  1. Yvan Decreux & Lionel Fontagné, 2011. "Economic Impact of Potential Outcome of the DDA," Working Papers 2011-23, CEPII research center.
  2. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
  3. Joseph Francois & Olga Pindyuk & Julia Woerz, 2009. "Trends in International Trade and FDI in Services: a global database of services trade," IIDE Discussion Papers 20090802, Institue for International and Development Economics.
  4. Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008. "Market Size, Trade, and Productivity," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 295-316.
  5. Fontagné, Lionel & Mitaritonna, Cristina, 2013. "Assessing barriers to trade in the distribution and telecom sectors in emerging countries," World Trade Review, Cambridge University Press, vol. 12(01), pages 57-78, January.
  6. Nora Dihel & Ben Shepherd, 2007. "Modal Estimates of Services Barriers," OECD Trade Policy Papers 51, OECD Publishing.
  7. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  8. Kox, Henk L.M. & Nordås, Hildegunn Kyvik, 2007. "Services trade and domestic regulation," MPRA Paper 2116, University Library of Munich, Germany.
  9. Feenstra, Robert C, 2002. "Border Effects and the Gravity Equation: Consistent Methods for Estimation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 491-506, December.
  10. Fukunari Kimura & Hyun-Hoon Lee, 2006. "The Gravity Equation in International Trade in Services," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(1), pages 92-121, April.
  11. Joseph Francois & Hans van Meijl & Frank van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR & CES & MSH, vol. 20(42), pages 349-391, 04.
  12. Keith Walsh, 2006. "Trade in Services: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade," The Institute for International Integration Studies Discussion Paper Series iiisdp183, IIIS.
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Citations

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Cited by:
  1. John Gilbert, 2013. "The economic impact of new regional trading developments in the ESCAP region," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 20(1), pages 1-32, June.
  2. Lionel Fontagné & Jean Fouré, 2013. "Opening a Pandora's Box: Modelling World Trade Patterns at the 2035 Horizon," Working Papers 2013-22, CEPII research center.
  3. Yvan Decreux & Lionel Fontagné, 2013. "What Did Happen in the DDA? Quantifying the Role of Negotiation Modalities," Working Papers 2013-38, CEPII research center.
  4. Schott, Jeffrey J. & Lee, Minsoo & Muir, Julia, 2012. "Prospects for Services Trade Negotiations," ADB Economics Working Paper Series 319, Asian Development Bank.
  5. Christen, Elisabeth & Francois, Joseph & Hoekman, Bernard, 2012. "CGE modeling of market access in services," Policy Research Working Paper Series 6106, The World Bank.
  6. Chauvin, Nicolas Depetris & Ramos, Maria Priscila, 2013. "The welfare effect of the new wave of protectionism: The case of Argentina," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151626, Agricultural and Applied Economics Association.
  7. Gabriel Felbermayr & Mario Larch & Lisandra Flach & Erdal Yalcin & Sebastian Benz & Finn Krüger, 2013. "Dimensionen und Effekte eines transatlantischen Freihandelsabkommens," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(04), pages 22-31, 02.
  8. Francois, Joseph & Manchin, Miriam & Tomberger, Patrick, 2013. "Services linkages and the value added content of trade," Policy Research Working Paper Series 6432, The World Bank.
  9. Marine George, 2013. "Does cross-border regulation really influence cross-border trade? Evidence from the Services Trade Restrictions Index," Post-Print dumas-00909960, HAL.
  10. Yvan Decreux & Lionel Fontagné, 2011. "Economic Impact of Potential Outcome of the DDA," Working Papers 2011-23, CEPII research center.
  11. Joseph Francois & Olga Pindyuk, 2013. "Modeling the Effects of Free Trade Agreements between the EU and Canada, USA and Moldova/Georgia/Armenia on the Austrian Economy: Model Simulations for Trade Policy Analysis," FIW Research Reports series IV-003, FIW.
  12. Decreux, Yvan & Milner, Chris, 2010. "Some New Insights into the Effects of the EU-South Korea Free Trade Area: The Role of Non Tariff Barriers," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 783-817.
  13. Gabriel J. Felbermayr & Mario Larch, 2013. "The Transatlantic Trade and Investment Partnership (TTIP): Potentials, Problems and Perspectives," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 14(2), pages 49-60, 08.

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