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Trade in Services and Regional Trade Agreements: Do Negotiations on Services Have to be Specific?


  • This paper is produced as part of the project ‘Globalisation, Investment and Services Trade (GIST) Marie Curie Initial Training Network (ITN)’ funded by the European Commission under its Seventh Framework Programme – Contract No. FP7-PEOPLE-ITN-2008-211429. I am grateful for very helpful comments by three anonymous referees, Matthew T. Cole, Ronald B. Davies, Lionel Fontagné, Wolfgang Keller and Fabrice Defever. All the errors are mine.


Trade in services has been on a substantial positive trend since the last decades, and the number of regional trade agreements (RTAs) in force has increased regularly overtime. However, negotiations on services remain hesitant even at the bilateral level. Classifying an RTA according to its degree of liberalisation in services allows accounting for ‘depth’ and heterogeneity issues amongst RTAs. I estimate a gravity equation using panel data covering the period 1999–2007, including bilateral and country-and-time fixed effects. The main results are: (i) amongst RTAs, only the trade agreements covering services have a significant effect on trade in services; and (ii) the deeper, in terms of sectors and of content, the agreement is, the more intratrade the signatory countries have.