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Financial services and the World Trade Organization - liberalization commitments of the developing and transition economies

Author

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  • Mattoo, Aaditya

Abstract

The author analyzes the results of the financial services negotiations under the World Trade Organization's General Agreement on Trade in Services (GATS). He shows that the negotiations have contributed to more stable and transparent policy regimes in many developing and transition economies and that the commitments in no way compromise the countries'ability to pursue sound macroeconomic and regulatory policies. But even though the number of countries that participated in the eventual agreement was impressive, the liberalizing content of commitments was in many cases quite limited. Numerical estimates suggest that in general the African and Eastern European participants made much more liberal commitments than the Asian and Latin American participants. On the whole, the outcome probably reflects how each participant balances the benefit of unilateral commitments against the benefit of retaining bargaining chips for future multi-sectoral negotiations. Two aspects of the outcome cause concern: 1) There has been less emphasis on introducing competition by allowing new entry than on allowing (or maintaining) foreign equity participation and protecting the position of incumbents. 2) Where it was deemed infeasible to introduce competition immediately, participants have taken little advantage of the GATS to lend credibility to liberalization programs by pre-committing to future market access.

Suggested Citation

  • Mattoo, Aaditya, 1999. "Financial services and the World Trade Organization - liberalization commitments of the developing and transition economies," Policy Research Working Paper Series 2184, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2184
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    References listed on IDEAS

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    1. Bagwell, K. & Staiger, R.W., 1996. "Reciprocal Trade Liberalization," Working papers 9602, Wisconsin Madison - Social Systems.
    2. Francois, Joseph & Martin, Will, 1995. "Multilateral Trade Rules and the Expected Cost of Protection," CEPR Discussion Papers 1214, C.E.P.R. Discussion Papers.
    3. Kono, Masamichi & Low, Patrick & Luanga, Mukela & Mattoo, Aaditya & Oshikawa, Maika & Schuknecht, Ludger, 1997. "Opening markets in financial services and the role of the GATS," WTO Special Studies, World Trade Organization (WTO), Economic Research and Statistics Division, volume 1, number 1.
    4. Piritta Sorsa, 1997. "The GATS Agreementon Financial Services; A Modest Start to Multilateral Liberalization," IMF Working Papers 97/55, International Monetary Fund.
    5. Philipp Harms & Aaditya Mattoo & Ludger Schuknecht, 2003. "Explaining liberalization commitments in financial services trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(1), pages 82-113, March.
    6. Claessens, Stijn & Glaessner, Tom, 1998. "The internationalization of financial services in Asia," Policy Research Working Paper Series 1911, The World Bank.
    7. Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-837, December.
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    Cited by:

    1. Daniel Müller-Jentsch, 2005. "Deeper Integration and Trade in Services in the Euro-Mediterranean Region : Southern Dimensions of the European Neighborhood Policy," World Bank Publications, The World Bank, number 7335, June.
    2. Ajitava Raychaudhuri & Prabir De, 2007. "Assessing Barriers to Trade in Education Services in Developing Asia - Pacific Countries:An Empirical Exercise," Working Papers 3407, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    3. Ivana Prica & Jelica Petrović VujaÄ ić, 2010. "Financial Services Liberalisation in Transition Countries and the Role of the WTO," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 57(4), pages 487-501, December.
    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.

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