IDEAS home Printed from https://ideas.repec.org/p/ris/dgtcen/2017_004.html
   My bibliography  Save this paper

Liberalizing global trade in Mode 5 services: How much is it worth?

Author

Listed:
  • Alessandro Antimiani

    (DG Trade)

  • Lucian Cernat

    (DG Trade)

Abstract

The growing role of services inputs in manufacturing exports ("services in boxes") has led to a proposal for a new modality of exporting services (mode 5 services) beyond the four modes of supply in the GATS. For the vast majority of WTO members the significance of mode 5 services is considerable, both in exports and imports. However unlike traditional GATS services trade, mode 5 services "in boxes" pay tariffs. This paper estimates that the global GDP gains from liberalizing mode 5 services at multilateral level could reach up to €300 billion by 2025 and world trade could increase by over €500 billion. The paper also examines the interplay between mode 5 services trade and the growing importance of future technological developments (e.g. software, digitalisation, the Internet of Things). Our preliminary set of results shows that a Mode 5 Services Initiative is important not only because of the positive impact it would have on global trade flows but also because it would facilitate trade-led technological progress in all regions of the world.

Suggested Citation

  • Alessandro Antimiani & Lucian Cernat, 2017. "Liberalizing global trade in Mode 5 services: How much is it worth?," DG TRADE Chief Economist Notes 2017-4, Directorate General for Trade, European Commission.
    • Handle: RePEc:ris:dgtcen:2017_004
    as

    Download full text from publisher

    File URL: http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155844.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2021. "Product Mix and Firm Productivity Responses to Trade Competition," The Review of Economics and Statistics, MIT Press, vol. 103(5), pages 874-891, December.
    2. Yvonne Wolfmayr, 2008. "Producer Services and Competitiveness of Manufacturing Exports," WIFO Studies, WIFO, number 34225, June.
    3. repec:spo:wpmain:info:hdl:2441/2adadp8ijs8ij8c4htsg0puqid is not listed on IDEAS
    4. Ianchovichina, Elena & McDougall, Robert, 2000. "Theoretical Structure Of Dynamic Gtap," Technical Papers 28723, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Alessandro Antimiani & Valeria Costantini, 2013. "Trade performances and technology in the enlarged European Union," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 40(3), pages 355-389, July.
    6. Lucian Cernat & Nuno Sousa, 2016. "The Trade and Jobs Nexus in Europe: How Important Are Mode 5 Services Exports?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(04), pages 65-67, January.
    7. Hellwig, Martin & Irmen, Andreas, 1999. "Wage Growth, Productivity Growth, and the Evolution of Employment," Sonderforschungsbereich 504 Publications 99-86, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    8. Thomas W. Hertel & Terrie Walmsley & Ken Itakura, 2005. "Dynamic Effects Of The "New Age" Free Trade Agreement Between Japan And Singapore," World Scientific Book Chapters, in: Philippa Dee & Michael Ferrantino (ed.), Quantitative Methods For Assessing The Effects Of Non-Tariff Measures And Trade Facilitation, chapter 18, pages 483-523, World Scientific Publishing Co. Pte. Ltd..
    9. Thomas W. Hertel & Terrie Walmsley & Ken Itakura, 2005. "Dynamic Effects Of The "New Age" Free Trade Agreement Between Japan And Singapore," World Scientific Book Chapters, in: Philippa Dee & Michael Ferrantino (ed.), Quantitative Methods For Assessing The Effects Of Non-Tariff Measures And Trade Facilitation, chapter 18, pages 483-523, World Scientific Publishing Co. Pte. Ltd..
    10. repec:hal:spmain:info:hdl:2441/2adadp8ijs8ij8c4htsg0puqid is not listed on IDEAS
    11. Magnus Lodefalk, 2014. "The role of services for manufacturing firm exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(1), pages 59-82, February.
    12. Erwin Corong & Thomas Hertel & Robert McDougall & Marinos Tsigas & Dominique van der Mensbrugghe, 2017. "The Standard GTAP Model, version 7," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 2(1), pages 1-119, June.
    13. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, December.
    14. Lucian Cernat & Zornitsa Kutlina-Dimitrova, 2014. "Thinking in a box: A ‘mode 5’ approach to service trade," DG TRADE Chief Economist Notes 2014-1, Directorate General for Trade, European Commission.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eduardo A. Haddad & Inácio F. Araújo, 2021. "The internal geography of services value‐added in exports: A Latin American perspective," Papers in Regional Science, Wiley Blackwell, vol. 100(3), pages 713-744, June.
    2. Cernat, Lucian & D'Andrea, Barbara & Liberatore, Antonella & Maurer, Andreas & Wettstein, Steen, 2018. "Towards a Global Data Set on Trade in Services By Sector and Mode of Supply," Conference papers 332924, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Wettstein, Steen & Liberatore, Antonella & Magdeleine, Joscelyn & Maurer, Andreas, 2019. "A Global Trade In Services Data Set by Sector and by Mode of Supply (TISMOS)," Conference papers 333058, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Carmen Díaz‐Mora & Erena García‐López & Belén González‐Díaz, 2022. "Bilateral servicification in global value chains and deep trade agreements," The World Economy, Wiley Blackwell, vol. 45(8), pages 2510-2531, August.
    5. Asimakopoulos, Grigorios & Revilla, Antonio & Rodríguez, Alicia, 2023. "International R&D sourcing, innovation and firm age: The advantage of ‘born-international sourcers’," Technovation, Elsevier, vol. 122(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wenxi Lu, 2018. "FDI, Service imports and Export development," School of Economics and Public Policy Working Papers 2018-05, University of Adelaide, School of Economics and Public Policy.
    2. Itakura, Ken & Hertel, Thomas & Jeff Reimer, 2003. "The Contribution of Productivity Linkages to the General Equilibrium Analysis of Free Trade Agreements," GTAP Working Papers 1193, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    3. Cai, Songfeng & Zhang, Yaxiong & Meng, Bo, 2015. "Spillover effects of TTIP on BRICS economies : a dynamic GVC-based CGE model," IDE Discussion Papers 485, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Hertel, Thomas, 2013. "Global Applied General Equilibrium Analysis Using the Global Trade Analysis Project Framework," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 815-876, Elsevier.
    5. Richard Pomfret & Uwe Kaufmann & Christopher Findlay, 2010. "Are Preferential Tariffs Utilized? Evidence from Australian Imports, 2000-9," School of Economics and Public Policy Working Papers 2010-13, University of Adelaide, School of Economics and Public Policy.
    6. Díaz-Bonilla, Carolina, 2007. "Poverty and Income Distribution Under Different Factor Market Assumptions: A Macro-Micro Model," Conference papers 331625, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Gouranga Gopal Das & Soamiely Andriamananjara, 2006. "Hub-and-Spokes Free Trade Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(1), pages 33-66, April.
    8. Peter Walkenhorst & Tadashi Yasui, 2004. "Quantitative Assessment of the Benefits of Trade Facilitation," International Trade 0401008, University Library of Munich, Germany.
    9. Huang, Qingbo & Zhang, Xiaohan & Li, Yan, 2023. "Study on the economic effects of China and ASEAN countries from the New International Land-Sea Trade Corridor," Transport Policy, Elsevier, vol. 139(C), pages 123-135.
    10. Elisabeth M. Christen & Joseph Francois & Bernard Hoekman, 2012. "CGE Modeling of Market Access in Services," Economics working papers 2012-08, Department of Economics, Johannes Kepler University Linz, Austria.
    11. José M. RUEDA‐CANTUCHE & Lucian CERNAT & Nuno SOUSA, 2019. "Trade and jobs in Europe: The role of mode 5 service exports," International Labour Review, International Labour Organization, vol. 158(1), pages 115-136, March.
    12. Walmsley, Terrie & Strutt, Anna, 2019. "Modelling Non-Tariff Barriers as an Exporter Cost," Conference papers 333043, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Rolf J. Langhammer & Daniel Piazolo & Horst Siebert, 2002. "Assessing Proposals for a Transatlantic Free Trade Area," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 57(02), pages 161-186, June.
    14. Cretegny, Laurent, 2006. "Liberalizing Services in Switzerland and with the European Union," Conference papers 331543, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    15. Fontagné, Lionel & Foure, Jean, 2016. "Is Trade Facilitation a Free Lunch? A General Equilibrium Approach," Conference papers 332757, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Elena Ianchovichina & Terrie Walmsley, 2005. "Impact of China's WTO Accession on East Asia," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 261-277, April.
    17. Stone, Susan F. & Strutt, Anna & Hertel, Thomas, 2009. "Assessing Socioeconomic Impacts of Transport Infrastructure Projects in the Greater Mekong Subregion," Conference papers 331872, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    18. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2003. "Multilateral, Regional and Bilateral Trade‐Policy Options for the United States and Japan," The World Economy, Wiley Blackwell, vol. 26(6), pages 803-828, June.
    19. Dimaranan, Betina V., 2005. "GTAP Data Base: Sources, Construction, and Distribution," Conference papers 331320, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    20. Nugraheni, Reninta Dewi & Widodo, Tri, 2018. "The Impact of ASEAN’S FTAs with China, Japan, Korea and Australia-New Zealand: An Analysis in GTAP Framework," MPRA Paper 86693, University Library of Munich, Germany.

    More about this item

    Keywords

    Mode 5 services; international trade; economic modelling;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:dgtcen:2017_004. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Zornitsa Kutlina-Dimitrova (email available below). General contact details of provider: https://edirc.repec.org/data/dgtecbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.