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Why do Countries enter into Preferential Agreements on Trade in Services? Assessing the Potential for Negotiated Regulatory Convergence in Asian Services Markets

  • Sauvé, Pierre

    ()

    (World Trade Institute, University of Bern, Switzerland)

  • Shingal, Anirudh

    ()

    (World Trade Institute, University of Bern, Switzerland)

More than half of the World Trade Organization (WTO)-notified services trade agreements (STAs) in effect since 2008 have involved at least one (South or Southeast) Asian trading partner. Drawing on Baier and Bergstrand’s (2004) determinants of preferential trade agreements and using the World Bank’s database on the restrictiveness of domestic services regimes (Borchert et.al. 2012), we examine the potential for negotiated regulatory convergence in Asian services markets. Our results suggest that countries within Asia that are more remote from the rest of the world and that have similar economic sizes, greater differences in relative factor endowments compared to the rest of the world, common legal origins, high levels of preexisting trade, and restrictive services regulations are more likely candidates for regulatory convergence. Our empirical model successfully predicts 10 of the 14 STAs negotiated during 2008–12 and 88 of the 89 dyads within Asia that lack an STA.

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Paper provided by Asian Development Bank in its series Working Papers on Regional Economic Integration with number 129.

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Length: 40 pages
Date of creation: 01 Apr 2014
Date of revision:
Handle: RePEc:ris:adbrei:0129
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  1. Shingal, Anirudh & Sauvé, Pierre, 2011. "Reflections on the Preferential Liberalization of Services Trade," MPRA Paper 32816, University Library of Munich, Germany.
  2. Miroudot, Sébastien & Sauvage, Jehan & Shepherd, Ben, 2010. "Measuring the Cost of International Trade in Services," MPRA Paper 27655, University Library of Munich, Germany.
  3. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1998. "The Quality of Goverment," NBER Working Papers 6727, National Bureau of Economic Research, Inc.
  4. Keith Walsh, 2006. "Trade in Services: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade," The Institute for International Integration Studies Discussion Paper Series iiisdp183, IIIS.
  5. Shingal, ANIRUDH, 2009. "How much do agreements matter for services trade?," MPRA Paper 32815, University Library of Munich, Germany, revised 15 May 2010.
  6. Miroudot, Sébastien & Sauvage, Jehan & Shepherd, Ben, 2012. "Trade costs and productivity in services sectors," Economics Letters, Elsevier, vol. 114(1), pages 36-38.
  7. Grossman, Gene M & Helpman, Elhanan, 1995. "The Politics of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 85(4), pages 667-90, September.
  8. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
  9. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
  10. Shepherd, Ben & Pasadilla, Gloria, 2012. "Services as a New Engine of Growth for ASEAN, the People’s Republic of China, and India," ADBI Working Papers 349, Asian Development Bank Institute.
  11. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-60, February.
  12. Erik der Marel & Sébastien Miroudot, 2014. "The economics and political economy of going beyond the GATS," The Review of International Organizations, Springer, vol. 9(2), pages 205-239, June.
  13. Borchert, Ingo & Gootiiz, Batshur & Mattoo, Aaditya, 2012. "Guide to the services trade restrictions database," Policy Research Working Paper Series 6108, The World Bank.
  14. Carolina Lennon, 2009. "Trade in Services and Trade in Goods: Differences and Complementarities," wiiw Working Papers 53, The Vienna Institute for International Economic Studies, wiiw.
  15. Erik Marel & Ben Shepherd, 2013. "Services Trade, Regulation and Regional Integration: Evidence from Sectoral Data," The World Economy, Wiley Blackwell, vol. 36(11), pages 1393-1405, November.
  16. Cyrille Schwellnus, 2007. "The Effect of Domestic Regulation on Services Trade Revisited," Working Papers 2007-08, CEPII research center.
  17. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
  18. Daniel L. McFadden, 1976. "Quantal Choice Analaysis: A Survey," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 363-390 National Bureau of Economic Research, Inc.
  19. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
  20. Matthew T. Cole & Am¨¦lie Guillin, 2013. "The Determinants of Trade Agreements in Services vs. Goods," Working Papers 1307, Florida International University, Department of Economics.
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