How much do agreements matter for services trade
This presentation is the property of its rightful owner.
Sponsored Links
1 / 18

How much do agreements matter for services trade ? PowerPoint PPT Presentation


  • 49 Views
  • Uploaded on
  • Presentation posted in: General

How much do agreements matter for services trade ?. Anirudh Shingal Senior Research Fellow, WTI [email protected] WTO Public Forum 2010, Geneva September 15-17, 2010.

Download Presentation

How much do agreements matter for services trade ?

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


How much do agreements matter for services trade

How much do agreements matter for services trade?

Anirudh Shingal

Senior Research Fellow, WTI

[email protected]

WTO Public Forum 2010, Geneva

September 15-17, 2010

The National Centres of Competence in Research (CCR) are a research instrument of the Swiss National Science Foundation (SNSF)


Motivation

Motivation

  • 49 of the 55 PTAs notified to the WTO before 2000 were goods agreements

  • In the last decade,150 PTAs have been notified of which nearly half cover trade in services

  • Obvious question – How effective are these agreements in fostering services trade?

World Trade Institute Berne


Sub text

Sub-text

  • What is the (services) trade effect of a PTA delineated by type (goods v services) and form (North-North v North-South, symmetric v asymmetric)?

  • Is there an incremental trade effect from a services accord if a “goods only” agreement is already in place?

World Trade Institute Berne


Why might we expect a positive trade effect

Why might we expect a positive trade effect?

  • Barriers to services trade are often prohibitive and not revenue generating, so fewer costs of trade diversion

  • A la trade in goods, benefits from possibilities for increased competition, exploitation of economies of scale and inducement of knowledge spillovers

  • However, “the sequence of liberalization matters more in services trade than in the case of goods trade” because location-specific sunk costs of production are important, so even temporary privileged access for an inferior supplier can translate into a long-term market advantage (Mattoo & Fink, pp 3)

World Trade Institute Berne


Exploratory tool the gravity model

Exploratory tool: The gravity model

  • Gravity model more applicable to services trade?

    -physical proximity (think Mode 4)

    -role of distance (Mode 1 v Mode 4)

    -services differentiated by quality and location may give rise to monopolistic competition

    [driving force behind IIT (think N-N trade); Helpman’s (1987) econometric specification of the NTT similar to the gravity specification]

World Trade Institute Berne


However empirical gravity literature is inconclusive on the

However, empirical gravity literature is inconclusive on the…

  • Trade effect e.g. insignificant in Grunfeld & Moxnes (2003); significant in others

  • Effect of distance e.g. more important for services trade in Kimura & Lee (2004); less important in Lejour & Verheijden (2004) & Lennon (2006); and insignificant in Walsh (2006)

  • Effect of common language e.g. insignificant in Kimura & Lee (2004); significant in Lennon (2006) & Walsh (2006)

World Trade Institute Berne


So what s new about this paper

So what’s new about this paper?

  • Empirical model is intuitively grounded

  • Uses advanced estimation techniques

  • Explores the impact of goods trade on services trade

  • Delineates trade effect into that emanating from services and “goods only” agreements

  • Disaggregates PTA-trade relationship by economic status of partner countries and reciprocity of commitments

  • Accounts for heterogeneity in trading partners in model estimation

  • Endogenizes the trade effect of PTAs in model estimation

World Trade Institute Berne


Sector mode of delivery and determinants of trade

Sector, mode of delivery and determinants of trade

World Trade Institute Berne


Model specification

Model specification

svsxijt = αij + β1gdpit + β2gdpjt + β3gdsxijt + β4DPCGDPijt + β5hkit + β6hkjt + β7teledenit + β8teledenjt + β9distij + β10ENGij + β11resti + β12restj + β13PTA_SVSijt + εijt

  • Lower cases variables are in log terms

  • Upper case variables are dummy variables

  • Economic data are in real value

World Trade Institute Berne


How much do agreements matter for services trade

Data

  • OECD database on bilateral trade in services

  • 25 OECD exporters

  • 53 OECD and non-OECD importers

  • 4327 observations

  • 1999-2003

World Trade Institute Berne


Number of observations on the ptas

Number of observations on the PTAs

  • Services (22.3% obs.)

  • Goods (27.8% obs.)

  • “Goods Only” (5.5% obs.)

  • NN_PTA_SVS (20% obs.)

  • NS_PTA_SVS (2% obs.)

  • AsymNS_PTA_SVS (1% obs.)

  • SymNS_PTA_SVS (1% obs.)

World Trade Institute Berne


Empirical results

Empirical results

  • Services trade effect of 11.6%, ceteris paribus and on average

  • A 10% increase in bilateral goods exports would raise bilateral services exports by 1.7%, ceteris paribus and on average

  • Much lower GDP elasticities than in this literature

  • Distance effect significant and less important for services trade than for goods trade

  • All explanatory variables have expected signs but not all estimates are statistically significant

World Trade Institute Berne


How much do agreements matter for services trade

World Trade Institute Berne


Disaggregating the services trade effect

Disaggregating the services trade effect

  • Only North-North agreements report both a positive and statistically significant trade effect; other results lack statistical significance

  • In aggregate, North-South services accords have the largest positive trade effect

  • Within North-South agreements, asymmetric accords have a larger and always positive trade effect

World Trade Institute Berne


How much do agreements matter for services trade

World Trade Institute Berne


Sequential and incremental impact of agreements

Sequential and incremental impact of agreements

  • “Goods Only” agreements do not report a statistically significant services trade effect

  • However, when paired with services agreements, the services trade effect of each set of agreements is enhanced

  • Thus, evidence for complementarities exists [this (services) trade effect ranges from 12.1-13.4% for services agreements and 2.3-2.4% for “goods only” accords, ceteris paribus and on average]

World Trade Institute Berne


How much do agreements matter for services trade

World Trade Institute Berne


Conclusion what do these results tell us

Conclusion: What do these results tell us…

  • Both goods trade and goods agreements have a positive impact on services trade

  • Services trade between countries may be driven as much by differences in factor endowments as by IRS

  • Trade alliances between the North and the South can be less than perfectly reciprocal

  • More prudent to negotiate goods and services agreements in tandem rather than sequentially

World Trade Institute Berne


  • Login