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Trade in services

Preferential trade agreements in services: friends or foes of the multilateral trading system?

Preferential market opening in services likely to be less harmful for the multilateral trading system than other PTAs

Authors: C. Fink
Publisher: Groupe d'Economie Mondiale , 2008

Full text of document

To examine preferential services liberalisation and its consequences for the multilateral trading system, this paper:

  • reviews the discriminatory nature of preferential trade agreement (PTA) commitments
  • examines rules of origin in services
  • points to the political economy implications of trade in services
  • explores the consequences of services PTAs for reciprocal bargaining and further multilateral integration
In general, PTAs can foster the emergence of political economy forces hindering further progress at the WTO. However, this is less likely in the case of services PTAs because of:
  • the nature of rules of origin in services
  • the ‘leaky’ nature of services agreements
However, services agreements are typically part of a broader set of trade negotiations. Therefore, their systemic consequences might still be considerable. To shed further light on this question, it would be helpful if:
  • governments committed to greater transparency
  • further analytical studies scrutinised the economic effects and political economy consequences of preferential market opening in services