Regional Versus Multilateral Liberalization of Trade in Services

At the same time as regional agreements to liberalize trade in services were being pursued by OECD countries, services were also introduced onto the agenda of a multilateral trade negotiation - the Uruguay Round. This paper focuses on the relationship between regional agreements and the draft General Agreement on Trade in Services (GATS), negotiated under the auspices of the Uruguay Round. Following a conceptual discussion of the political economy of regional as opposed to multilateral negotiations, I analyse existing data on trade and investment flows with a view to gaining some insight into the likely interest group preferences influencing the choice between alternative institutional arrangements to liberalize trade in services. Both the data and a comparison of the content of the major existing agreements suggest that service industries are more likely to see regional and multilateral liberalization as complements than substitutes.