Abstract
We analyze the extent to which the EU-15 and 16 transition economies used the WTO General Agreement on Trade in Services (GATS) to commit to service sector policy reforms. GATS commitments are compared with the evolution of actual policy stances over time. While there is substantial variance across transition economies on both actual policies and GATS commitments, we find an inverse relationship between the depth of GATS commitments and the ‘quality’ of actual services policies as assessed by the private sector. In part this can be explained by the fact that the prospect of EU accession makes GATS less relevant as a commitment device for a subset of transition economies. However, for many of the non-EU accession candidates the WTO seems to be a weak commitment device. One explanation is that the small size of the markets concerned generates weak external enforcement incentives. Our findings suggest greater collective investment by WTO members in monitoring and transparency is needed to increase the benefits of WTO membership to small countries.
Highlights
We analyze the extent to which the EU-15 and 16 transition economies used the WTO General Agreement on Trade in Services (GATS) to commit to service sector policy reforms
The question explored in this paper is the extent to which trade agreements were used as focal points or commitment devices for service sector policy reform
This has always been more difficult to argue in the case of small countries, where an alternative, political economy-based hypothesis is more likely: trade agreements offer a mechanism for governments to signal their commitment to a particular policy path (Tumlir, 1985)
Summary
We analyze the extent to which the EU-15 and 16 transition economies used the WTO General Agreement on Trade in Services (GATS) to commit to service sector policy reforms. Our interest is in part to determine whether there are common or consistent differences between the set of countries that were and that were not EU accession candidates, and given that the EU is a deep integration agreement, whether the WTO could play a similar role as a focal point/lock-in mechanism as the EU for those countries where EU accession is not in the cards Another question of interest is whether transition economies – both accession candidates and others – had caught up with the European Union in terms of liberalization of services markets as of 2004. Even for recent accession countries this is not a redundant question as the EU is not (yet) a true common market for services
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