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The paradox of “preferences”: regional trade agreements and trade costs in services

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  • Miroudot, Sebastien
  • Shepherd, Ben

Abstract

Abstract This paper analyzes the relationship between regional trade integration and trade costs in services industries. The empirical analysis relies, on the one hand, on a dataset of theory-consistent bilateral trade costs calculated for 55 countries over the period 1999-2009 and, on the other hand, on an analysis of services commitments in 66 regional trade agreements to which these countries are parties. Despite the proliferation of services RTAs in the past decade, we find that trade costs are only slightly lower due to the impact of these agreements. In addition, we find that the trade cost reductions that do take place tend to happen before the agreement is signed. This mechanism is consistent with countries using services RTAs as a way of “locking in” reforms. Finally, we find that the preferential margin of services RTAs is quite thin: members and non-members both see slightly lower trade costs when an RTA is signed. We discuss the possible explanations for these findings in terms of the nature of services RTAs and their relationship with regulatory reform in signatory countries. Based on these results, we argue that regionalism in the case of services seems relatively non-discriminatory and does not lead to substantial trade preferences.

Suggested Citation

  • Miroudot, Sebastien & Shepherd, Ben, 2012. "The paradox of “preferences”: regional trade agreements and trade costs in services," MPRA Paper 41090, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41090
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    References listed on IDEAS

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    Cited by:

    1. repec:ebl:ecbull:eb-17-00999 is not listed on IDEAS
    2. Shandre Mugan Thangavelu & Wang Wenxiao & Sothea Oum, 2017. "Servicification in Global Value Chains: The Case of Asian Countries," Working Papers DP-2017-12, Economic Research Institute for ASEAN and East Asia (ERIA).
    3. Messerlin, Patrick, 2015. "The Services Dimension of TTIP," CEPS Papers 10550, Centre for European Policy Studies.
    4. Bernard Hoekman, 2014. "Sustaining multilateral trade cooperation in a multipolar world economy," The Review of International Organizations, Springer, vol. 9(2), pages 241-260, June.
    5. repec:eee:jeeman:v:88:y:2018:i:c:p:95-113 is not listed on IDEAS
    6. Patrick Messerlin, 2014. "Negotiating Mega-Agreements: Lessons from the EU," EUI-RSCAS Working Papers p0411, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    7. Andrea Goldstein & Alessia Amighini & Bernard Hoekman, 2016. "Revitalizing the Global Trading System: What Could the G20 Do?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(4), pages 34-54, July.
    8. Woori Lee, 2017. "Services liberalization and GVC participation: New evidence for heterogeneous effects by income level and provisions," CTEI Working Papers series 08-2017, Centre for Trade and Economic Integration, The Graduate Institute.
    9. Patrick Messerlin, 2014. "Negotiating Mega-Agreements: Lessons from the EU," RSCAS Working Papers 2014/112, European University Institute.
    10. Holladay, J. Scott & Mohsin, Mohammed & Pradhan, Shreekar, 2018. "Emissions leakage, environmental policy and trade frictions," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 95-113.

    More about this item

    Keywords

    Trade policy; Trade in services; Regional trade agreements; services trade liberalization;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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