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Inter-modal Linkages in Services Trade

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  • Rupa Chanda

Abstract

According to the GATS, services can be traded through four different modes of supply, namely, cross border supply, consumption abroad, commercial presence, and movement of natural persons, termed modes 1, 2, 3, and 4, respectively. There is much evidence to indicate interdependence across these four modes in services trade. There are essentially two types of linkages, namely, positive and negative linkages, across the various modes of supply. Positive linkages take the form of (i) complementarities across modes, where one or more mode is simultaneously used for providing the service across borders; and (ii) facilitation across modes, where trade through one mode creates conditions that are conducive for trading through other modes. Negative linkages take the form of (i) substitution across modes, where trade through one mode is substituted by another; (ii) restrictions on one mode which affect trade through other modes of supply and distort the way in which a service is trade; and (iii) restrictions which apply across multiple modes and constrain several modes simultaneously. In addition to these first order linkages, there are also extended spillover effects across the modes that arise indirectly over the medium and long run. This paper discusses the various kinds of linkages that are found in service sector trade, using evidence from companies, countries, and surveys and from a wide range of services. The objective is to provide an integrated perspective on service sector trade and related multilateral negotiations under the GATS so that countries can better leverage cross modal and cross-subsectoral trade opportunities, address constraints in a holistic manner, and maximize the overall gains from services trade.

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File URL: http://dx.doi.org/10.1787/747731586224
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Trade Policy Papers with number 30.

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Date of creation: 27 Jan 2006
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Handle: RePEc:oec:traaab:30-en

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Cited by:
  1. Carolina Lennon, 2008. "Trade in services: Cross-border trade vs commercial presence. Evidence of complementarity," PSE Working Papers halshs-00586217, HAL.
  2. repec:hal:wpaper:halshs-00586217 is not listed on IDEAS
  3. Peter Havlik & Olga Pindyuk & Roman Stöllinger, 2009. "Trade in Goods and Services between the EU and the BRICs," wiiw Research Reports 357, The Vienna Institute for International Economic Studies, wiiw.

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