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Economic Impacts of FTAs on Trade in Services: Some empirics in East Asia

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  • Hikari ISHIDO

Abstract

While so many research reports feature the positive impacts of free trade agreements (FTAs) on liberalization in the services sector, there seems to be no detailed quantitative analysis focusing exclusively on the liberalization of trade in services under the FTAs in the Association of Southeast Asian Nations (ASEAN). This paper makes a first-step analysis on the impact of ASEAN-related FTAs on the Mode 3 (commercial presence)-based trade in services. The first section analyzes the aggregate survey results, featuring the support functions of service firms for manufacturing activities as well as the possible impacts of "intangibility," "scale economy," and "network effect" on the service firms' foreign commercial presence. Then, utilizing a newly constructed firm-level database matched with the Hoekman Index (for measuring the degree of service sector liberalization) through Mode 3 (commercial presence), standard qualitative regression analyses were conducted. Overall, the results reveal some positive correlations between the degree of service trade liberalization in the host country and service firms' commercial presence in that country, hence a policy suggestion to promote service trade liberalization further possibly under the proposed Regional Comprehensive Economic Partnership (RCEP).

Suggested Citation

  • Hikari ISHIDO, 2013. "Economic Impacts of FTAs on Trade in Services: Some empirics in East Asia," Discussion papers 13091, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:13091
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    References listed on IDEAS

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    1. Hikari Ishido, 2012. "Liberalization of Trade in Services under ASEAN+n FTAs: A Mapping Exercise," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 16(2), pages 155-204.
    2. Fink, Carsten & Molinuevo, Martín, 2008. "East Asian preferential trade agreements in services: liberalization content and WTO rules," World Trade Review, Cambridge University Press, vol. 7(4), pages 641-673, October.
    3. Gootiiz, Batshur & Mattoo, Aaditya, 2009. "Services in Doha : what's on the table ?," Policy Research Working Paper Series 4903, The World Bank.
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