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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
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    References listed on IDEAS

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    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).

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    JEL classification:

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

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