Measuring the cost of international trade in services

We present a new dataset of international trade costs in services sectors. Using a theory-based methodology combined with data on domestic shipments and cross-border trade, we find that trade costs in services are much higher than in goods sectors: a multiple of two to three times in many cases. Trade costs in services have remained relatively steady over the last ten years, whereas trade costs in goods have fallen overall at an impressive rate. We show that even in a regional grouping that has done much to promote a single market in services–the EU–there remains considerable heterogeneity in trade costs across countries. Our findings generally suggest an important role for future policy reforms to reduce the regulatory burdens facing services sectors and facilitate trade in services.