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The Discriminatory Effect of Domestic Regulations on International Services Trade

Author

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  • Matthieu Crozet
  • Emmanuel Milet
  • Daniel Mirza

Abstract

In order to develop trade in services, the GATS aims to eliminate progressively discriminatory regulations, which apply to foreign suppliers. This paper looks instead at the trade effect of domestic regulations, which apply to all firms indifferently and do not intend to exclude imports. We propose a theory-based empirical test to determine whether or not these domestic regulations affect more foreign suppliers than local ones, through the sign of their effect on the trade margins. We then apply it on French firm-level exports to OECD countries in professional services. Our econometric results show that domestic regulations in the importing markets do matter significantly for trade in services. They reduce both the decision to export and individual exports. A 10% percent increase in regulations reduces services export values by more than 7% and the probability of exporting with respect to that of not exporting by 2.8%. This result tends to prove that domestic regulations are discriminatory de facto even if they are not de jure.

Suggested Citation

  • Matthieu Crozet & Emmanuel Milet & Daniel Mirza, 2012. "The Discriminatory Effect of Domestic Regulations on International Services Trade," Working Papers 2012-02, CEPII research center.
  • Handle: RePEc:cii:cepidt:2012-02
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Vaillant, Marcel, 2012. "How to encourage network trade rules interconnections? an application to the case of non tariff barriers," MPRA Paper 47254, University Library of Munich, Germany, revised Jun 2012.
    2. Tanja Goodwin & Martha Denisse Pierola, 2015. "Export Competitiveness," World Bank Other Operational Studies 23658, The World Bank.
    3. Julien Gooris & Cristina Mitaritonna, 2015. "Which import restrictions matter for trade in services ?," Working Papers 2015-33, CEPII research center.
    4. Dincer, Nergiz & Tekin-Koru, Ayca, 2014. "A League of Their Own: Services Exporters within Goods Exporters," MPRA Paper 53294, University Library of Munich, Germany.

    More about this item

    Keywords

    Trade in services; Domestic Regulations; Firm Heterogeneity;

    JEL classification:

    • F1 - International Economics - - Trade
    • L8 - Industrial Organization - - Industry Studies: Services

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