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The Role of Services in Global Value Chains: Insights from GATS and RTAs

This paper explores the critical role of services in global value chains (GVCs), focusing on their enabling, essential, and driving functions within goods-focused GVCs. It assesses the commitments under the General Agreement on Trade in Services (GATS) and regional trade agreements (RTAs) and highlights the limitations of GATS commitments. The study covers the proliferation of services RTAs, analyzing liberalization commitments and comparing them with GATS and DDA achievements. It provides insights into market access, national treatment commitments, and implications for ongoing multilateral negotiations.

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The Role of Services in Global Value Chains: Insights from GATS and RTAs

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  1. GATS and Services RTAs: How Relevant for Global Value Chains? Martin Roy WTO Secretariat

  2. Services and Global Value Chains • Services are: • Enablers of goods-focused GVC • Essential component of goods-focused GVC • Drivers of certain goods-focused GVC • GVCs in their own right

  3. Role of Trade Commitments and Agreements on Services • Legal guarantees • Reducing access barriers • Addressing regulatory barriers But… • Limited commitments under GATS so far • How have services RTAs fared in relation to facilitating GVC?

  4. General Trends • Services RTAs are proliferating • 6 services RTAs notified before 2000; 97 since 2000. • 11 WTO Members involved in such RTAs before 2000; a majority are now. • Still a small fraction of all RTAs notified, but common feature of RTAs involving developed countries

  5. Regional Imbalance

  6. Assessing Commitments in Services RTAs • Purpose of the research: • Assess liberalization commitments in recent RTAs and compare them with achievements under GATS and the DDA. • Provide a basis for analysing trends and implications, and open avenues for future research, including on supply chains.

  7. Data and Methodology • Analysis of market access and national treatment commitments of 53 Members (EU as one) in 67 RTAs • Focus on Modes 1 and 3 • Comparison between a Member’s GATS commitments, DDA offer, and various RTA commitments, per mode of supply and per subsector. Roy (2011), “Services Commitments in Preferential Trade Agreements: An Expanded Dataset”, WTO Staff Working Paper, http://www.wto.org/english/res_e/reser_e/ersd201118_e.pdf

  8. Data and Methodology Two basic approaches used: • Proportion of sub-sectors newly committed or improved. • An Hoekman-type index of GATS+ commitments in RTAs. • Starting Point: • Score of 1 for full commitments • Score of 0.5 for partial commitments • Score of 0 for no commitment

  9. Key Trends: Sectoral Coverage Source: Roy (2011), updated from Roy, Marchetti and Lim (2007)

  10. Index: Regional Examples

  11. Index: Regional Trends

  12. Index: Sectoral Trends

  13. Index: ‘Digital’ Services Cluster

  14. Index: Logistics Services Cluster

  15. Index: Transport Segment

  16. WB Restrictiveness Index: Transport Services in Latin America (Data from World Bank STRI database)

  17. WB Restrictiveness Index: Transport Services

  18. Restrictiveness Index: Finance, Telecom, Professional Services (regional average) (Data from World Bank STRI database)

  19. WB Restrictiveness Index: Finance, Telecom, Professional Services (Data from World Bank STRI database)

  20. WB Logistics Performance Index • No LA country in top 30 • ‘Top’ performers include: • Chile (39), Brazil (45), Mexico (47), Argentina (49), Colombia (64)

  21. Implications… • Limits to what RTAs can – and have - achieved • Impact of RTAs on multilateral services negotiations • Multilateralism brings particular challenges, but greatest possible rewards

  22. Thank you!

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