Services Liberalization Research Articles

Services liberalization and global value chain participation: New evidence for heterogeneous effects by income level and provisions

AbstractParticipation in global value chains (GVCs) is a key element in the industrialization strategies of many developing nations. This paper investigates the role of services liberalization in promoting participation in GVCs. Using the gravity framework, I examine the impact of services trade agreements on gross trade and GVC trade (backward and forward participation) in goods. I find that services trade agreements promote both, but especially GVC trade, although the effects are heterogeneous: the impact is bigger for developing nation exporters. Moreover, services agreements that allow the export of services without local presence (nonestablishment rights) are particularly important in fostering GVC participation.

Trade liberalization in services: Investor responses to NAFTA’s cross-border trucking provisions

ABSTRACTWe investigate the response of US trucking firms to the removal of barriers to cross-border trucking under NAFTA. This was done via a program implemented in 2007, cancelled in 2009, and reinstated in 2011. We use a model of endogenous exporting to show that this can arise from incorrect expectations of import competition. We find that, unsurprisingly, the program’s start resulted in lower stock returns, particularly for border firms. However, later policy changes indicate that investors, and particularly those investing in US multinationals, viewed the pilot as beneficial.

Services Liberalization in ASEAN: Foreign Direct Investment in Logistics edited by Tham SiewYean and Sanchita BasuDas (eds) ISEAS, Singapore, 2018 Pp. 375 + xxvii, ISBN: 978 981 4786 18 8

Services Liberalization in ASEAN: Foreign Direct Investment in Logistics edited by Tham SiewYean and Sanchita BasuDas (eds) ISEAS, Singapore, 2018 Pp. 375 + xxvii, ISBN: 978 981 4786 18 8

The labour market effects of applied service regimes and service sector reforms

AbstractThis article offers novel insights into the modal and sectoral characteristics of trade in services that may exert an influence on the redistributive properties of liberalization in service trade and investment. It uses descriptive statistics, and econometric analysis to examine the labour market effects of unilateral service regimes, drawing on data from the OECD's Services Trade Restrictiveness Index for a sample of 44 OECD and non‐OECD countries and 22 sectors over the period 2014–16. Whereas the findings suggest that the unilateral liberalization of services is not associated with net labour displacement effects, the authors call for empirical evidence, based on improved data sources, for a fuller understanding of this issue.

International Trade and Health Care in Brazil: An Unpredicted Tale Threatening Health Care Entitlement?

The General Agreement on Trade in Services (GATS), established in 1994, has been a key element of market liberalization of health care services. Brazil had the provision of health care services partially protected from international competition until 2015, when a constitutional change opened the national health care market to international provision. We performed a retrospective and prospective policy analysis based on a systematic policy document review, general literature review, and secondary data analysis mapping, describing and analyzing the international trade agreements signed by Brazil with the World Trade Organization (WTO) and the available legislation relevant to health care services. The provision of health care services was not included in the WTO commitments signed by Brazil during the analyzed period (1994-2018). Financing of private health insurance was part of the agreement since 1994. There was a mild liberalization of the private health insurance sector, while provision of health care services was forbidden to foreign investors until 2015. The mode 3 of GATS presents the greatest potential impact as it exposes health care provision to international competition. The international liberalization of the provision of health care services in Brazil is now legal and an observable consequence of the pressure to gradually lift trade barriers in the health and health care sector.

The African Continental Free Trade Agreement: Welfare Gains Estimates from a General Equilibrium Model

In March 2018, representatives of member countries of the African Union signed the African Continental Free Trade Area (AfCFTA) agreement. This agreement provides a framework for trade liberalization in goods and services and is expected to eventually cover all African countries. Using a multi-country, multi-sector general equilibrium model based on Costinot and Rodriguez-Clare (2014), we estimate the welfare effects of the AfCFTA for 45 countries in Africa. Three different model specifications-comprising both perfect competition and monopolistic competition-are used. Simulations include full elimination of import tariffs and partial but substantial reduction in non-tariff barriers (NTBs). Results reveal significant potential welfare gains from trade liberalization in Africa. As intra-regional import tariffs in the continent are already low, the bulk of these gains come from lowering NTBs. Overall gains for the continent are broadly similar under the three model specifications used, with considerable variation of potential welfare gains across countries in all model structures.

New Generation Trade Treaties – The Transatlantic Trade and Investment Partnership

INTERNATIONAL union rights Page 28 Volume 22 Issue 3 2015 were made to ILO Conventions, reaffirming workers ’ rights, that nothing in the agreement could bind corporations and secure enforcement of rights, and nothing was included to protect collective agreements. Finally he argued that CETA and TTIP, if agreed, would provide the opportunity for corporations to challenge differences between employment law regimes of EU member states, undermining the basis for social Europe and facilitating the race to the bottom. A north American perspective on trade agreements was provided by Ben Davies (USW). He outlined some of the differences between EU and US standards and how, in the area of chemicals, TTIP could lead to the undermining of the EU’s precautionary principle (where chemicals must not be used until evidence indicates they are safe). He provided evidence of the difficulties of using ILO conventions within free trade agreements (not least due to their low level of ratification in the US) and how the US state has not responded to the assassination of trade unionists in Guatemala, despite complaints filed under the bilateral trade agreement over 7 years ago. Despite the challenges , the USW continued to campaign and lobby actively against these new generation trade agreements and stressed the importance of building support against TTIP and CETA from among the European trade union movement. Discussions surrounding the position in Europe included contributions from Penny Clarke (EPSU) who stressed the federation’s opposition to ISDS and the liberalisation of public services, Steve French (Keele University) who examined the TTIP negotiations in the light of the proposed referendum on EU membership in the UK and Ben Richards (Unite) who examined the issues in building support across European trade unions to oppose free trade agreements. He highlighted the contrasting positions of CO Industri (Denmark) and CGT-FTM (France) within IndustriALL-Europe and how agreement was being forged around key principles which had to be applied in any new generation agreement. The final speaker was Labour MEP, Judith Kirton-Darling, who stressed the opportunity that the new generation trade agreements might play in re-regulating international trade, and the role of Labour MEPs within the social democratic bloc within the European Parliament in trying to secure opposition to TTIP if it did not exclude ISDS, public services and secure binding labour rights. She highlighted the difficulties in building a coalition to oppose TTIP in the Parliament, and the difficulties in gaining access to information about the treaty. In summary, the seminar was an excellent event to promote debate and understanding around the complex and apparently remote topic of international trade agreements for many trade unionists. to be added T his is a brief report of a three-day seminar organised by Unite the union in July 2015, focusing upon the growth of free trade agreements and trade union responses. Opening the seminar Adrian Weir (Assistant Chief of Staff, Unite) placed the seminar into context, outlining how Unite had adopted a position of opposing TTIP in in its entirety at its policy conference in July 2014 and how this position had been adopted in relation to the proposed TTIP, CETA, TPP and TISA trade agreements at the 2014 TUC Congress. Finally, the steering group of Workers Uniting (Unite-USW partnership) had committed to full opposition to these new trade agreements. The seminar was then addressed by Peter Rossman (IUF) who outlined how the development of the new generation trade agreements, starting with NAFTA in 1994, was little to do with removing trade barriers, and focused upon protecting the investment rights of transnational corporations . One example was the attempt to extend trade deals to services, affecting those services associated with manufacturing as well as public services traditionally supplied by the state. Crucially, one aim of the new agreements was to apply a principle of ‘negative listing’, so that governments could only exclude services from a trade agreement at the time of signature, meaning that returning these to the public sector and excluding new emergent sectors would become impossible, locking in privatisation. This would be secured through Investor State Dispute Settlement (ISDS) clauses in agreements which allowed corporations to take governments to secret courts for loss, or even the...

LIBERALISASI JASA DISTRIBUSI, MASUKNYA MODAL ASING DAN HUBUNGANNYA DENGAN MODAL DOMESTIK INDONESIA

The aims of this study are to determine the level of liberalization of the services sector and to analyze a causal relationship between Foreign Direct Investment/FDI (as a result of the liberalization of the distribution service) and Domestic Investment/DI in the sector. The method used in this research are descriptive analysis and Panel-VECM-Granger. The results showed that the degree of liberalization of distribution services, especially related to FEP has not met the target of liberalization of MEA 2015. Hypothesis testing results show that there is a unidirectional Granger-Causality relationship in short-term and long-term between FDI and DI. That relationship is FDI strongly influencing DI in the Indonesian distribution services sector. ECT value of the independent variable of FDI is -1.0, which means that the speed of change in the value of DI that caused by the changes of FDI to achieve a equilibrium is 100 percent per year. Thus it is known that the entry of FDI encourage domestic investment activity in the Indonesian distribution services sector. The results of this study need to be considered in terms of improvement FEP in the distribution services sector. FEP improvement policy will encourage the entry of FDI and indirectly encourages DI.

The impact of the China–Australia Free Trade Agreement on Australia's education exports to China: A legal and economic assessment

AbstractAs a landmark achievement in the development of the China–Australia bilateral economic relations, the China–Australia Free Trade Agreement (“ChAFTA”) achieves a higher level of liberalisation in education services compared with China's commitments under the World Trade Organisation and its other free trade agreements. However, the ChAFTA fails to relax the major regulatory barriers in China, which will remain the key obstacles to Australia's education services exports to China. Through a preliminary study and a regression analysis of the impacts of the ChAFTA on Australia's education exports to China based on available data, we show that the ChAFTA did not play a significant role in promoting the application and approval of Sino‐Australian joint programmes but did contribute to the growth of international student enrolments from China. The effect of the ChAFTA is, at best, secondary to that of domestic regulation and tends to be greater in less regulated areas.

From Sacchi to Uber: 60 years of Services Liberalization, 10 years of the Services Directive in the EU

The only partial completion of the EU internal market for services has arguably been one of the important stumbling blocks in unleashing economic growth throughout the Union. While being regarded as an outlier for decades, the freedom to provide services came to the forefront after a series of studies underlining the economic benefits of further services liberalization within the EU. In this regard, the Services Directive has been the controversial reaction of the EU legislature to this quest for a new ‘integration boost’. An initially central piece of the Lisbon Strategy, the Directive aims at the elimination of the remaining legal barriers to the achievement of the internal market for services, while ensuring legal certainty for service suppliers and consumers. The Directive operationalizes Articles 49 and 56 TFEU and, in several respects, consolidates six decades of case-law delivered by the Court of Justice of the European Union (CJEU). This article offers a succinct account of the services-related integration story within the EU. It reviews 60 years of services-related case-law, including the first 10 years after the adoption of the Services Directive and the first enforcement period. In this respect, it will argue that the Directive constitutes, along with EU primary law, an additional legal instrument to be used by the CJEU judges with a view to further pursuing the objectives of the EU internal market. The second important level that the Directive operates relates to the transparency-enhancing and mutual-trust-building benefits from the implementation of the Directive, which should lead to important compensatory measures of formal and informal nature alike. On a pessimistic tone, then, the article submits that the Directive will not serve as a vector for completing the single market in services anytime soon. In the end, its effectiveness will depend on the Member States’ discretion and the ability of regulators to build trust for the benefit of service suppliers and mobility despite regulatory competition within the EU.

Wpływ liberalizacji usług w Unii Europejskiej na innowacyjność i konkurencyjność polskich przedsiębiorstw usługowych. Wyniki badań

Artykuł przedstawia wyniki badania polskich przedsiębiorstw usługowych przeprowadzonego w celu oceny wpływu liberalizacji usług na unijnym rynku, wprowadzonej dyrektywą usługową z 2006 roku, na konkurencyjność i innowacyjność polskich przedsiębiorstw usługowych. Badanie przeprowadzono wśród 400 przedsiębiorstw świadczących usługi: handlowe, budowlane, rzemieślnicze, specjalistyczne związane z działalnością biznesową, szkoleniowe, edukacyjne i informacyjne, turystyczne, zakwaterowania i wyżywienia. Przedmiotem badania była ocena liberalizacji usług przez podmioty oraz korzyści i barier wynikających z niej dla usługodawców. Na polskim rynku nie ma tak kompleksowego badania przedsiębiorstw usługowych eksportujących swoje usługi na rynki krajów Wspólnoty. Wyniki przedstawione w artykule są efektem oryginalnych, autorskich badań. Sformułowano dwie hipotezy badawcze: (1) dyrektywa usługowa pozytywnie wpływa na konkurencyjność i innowacyjność polskich przedsiębiorstw usługowych na rynku wspólnotowym; (2) przedsiębiorcy w większym stopniu dostrzegają korzyści w obszarze wpływu na konkurencyjność i innowacyjność ich przedsiębiorstw niż bariery implementacji dyrektywy usługowej. Obie hipotezy zostały pozytywnie zweryfikowane. Artykuł ma charakter badawczy.

Integration Character of the CETA Agreement

One of the manifestations of economic globalisation seen in recent years is the so‑called “new generation” type of trade agreements such as the TPP, CETA and TTIP. They aim at trade liberalisation, but their scope is broader, comprising other areas of socio‑economic life, more or less directly linked to trade, such as e.g.: the liberalisation of public services, the mutual recognition of professional qualifications, the deregulation and liberalisation of financial markets, the protection of intellectual property rights, and the cooperation in creating new rules or protecting mutual investments. Therefore, the aim of this paper is to analyse the scope and content of the Comprehensive Economic and Trade Agreement (CETA) signed in 2016 by the European Union and Canada from the point of view of the Balassa stages of economic integration and the EU’s experience in order to state whether the naming of such agreements as trade agreements, even with the “new generation” qualification, is really justified. The analysis presented in this paper leads to the conclusion that this agreement should rather be included in the category of agreements labelled as integration agreements. Most of the CETA provisions are at the same level of sophistication as was achieved by the EU countries at the stage of building the single market, that is, at the stage of the implementation of the common market in Balassa’s nomenclature, and some of them are at the stage of economic and monetary union. The scope of the CETA, i.e. the number of areas of social and economic life regulated by it as well as their advancement and complexity, goes far beyond what is commonly understood as a trade agreement and beyond its official purpose – the creation of a free trade area between the European Union and Canada. It leads to economic integration at a level far deeper than a free trade area in its classic and common sense.

Direct Effect and Covert Integration: A Critical Review of the Liberalization of Port Cargo Handling Services Through the Spanish Case

Article 49 of the Treaty on the Functioning of the European Union contains the principle of freedom of establishment. Discrimination based on nationality was prohibited when freedom of establishment was involved. That was the only EU law provision invoked by the Commission to monitor a reform of Spanish Port Law, which concluded in May 2017. No secondary EU regulations were enacted, yet, the reform led to the overruling of the staff recruitment system for cargo-handling services in Spanish docks. The new recruitment system was already designed by the Commission and transposed by an Act of the Spanish Parliament as if it was derived from a Directive. An infringement action and a ruling of the European Court of Justice were the formal mechanisms to make the design of the Commission enforceable. Notwithstanding the apparent simplicity of this reform, there were indirect normative and institutional mechanisms working through well-known dynamics of supranational integration. This paper presents an analysis of those mechanisms, paying particular attention to the role of direct effect in the ECJ infringement decision and to the use of soft law and institutional cooperation as covert integration strategies.

Trade Agreements, Regulatory Institutions and Services Liberalization

AbstractMany agreements to liberalize trade in services tend to be limited in scope. This is a puzzle considering the high share of services in total employment and value added and relatively high barriers to trade in services in many countries. In this paper we argue that neglected complementarities between services trade policies and domestic regulation may help to understand the limited ambition on services observed in many trade agreements. We show that the productivity effects of services trade liberalization are conditional on regulatory quality. Our findings suggest that greater effort to design trade agreements with a view to improving regulatory quality may be a necessary condition for deepening the services coverage of trade agreements and will enhance the welfare gains from services trade liberalization.

EU services liberalization and TFP growth: Industry level evidence

We explore whether the announcement of the EU services directive affected total factor productivity growth of European services. Difference in differences estimates highlight a positive influence following the initial announcement. Medium and high growth sectors are those which mostly benefited.

User acceptance of long distance bus services in Germany

Since the liberalization of intercity bus services in Germany in 2013 the intercity bus market has seen tremendous growth (and concentration). Herein, we attempt to assess its long-term market potential. However, as the bus market had been completely regulated for decades, only limited data on user behaviour and revealed preferences currently exists. Our paper wants to contribute to closing this research gap. We conducted a representative survey for Germany in spring 2014 to collect data on actual and potential users of intercity bus services. Our paper presents the most relevant results of this survey and investigates the passenger acceptance of long distance bus services by potential and effective users. We want to show how users evaluate bus services in comparison to alternative modes (rail services, aircraft or use of passenger cars). The analysis distinguishes between different travel purposes and distance. In particular, we examine travel purposes (business trips, holiday and leisure trips), distance, and modal characteristics (e.g. price, quality, speed) as key determinants of modal choice to assess the potential for modal shift from rail, plane, and private car towards intercity bus services. In addition, we also consider habituated behaviour as another determinant of modal choice.

Citizens as Consumers in the Data Economy: The Case of Smart Cities

This article offers a critical account of the concept of “citizen-consumer” in the context of smart cities. This hybrid concept emerged in the 1990s with the New Labour Movement in the setting of the liberalization and privatization of public infrastructures to refer to the consumption of public goods and services. The notion of “citizen-consumer” recently reappeared in the literature on smart cities as public bodies collaborate closely with private actors to offer more responsive, efficient, and data-driven public services to their residents and visitors. In this modern form of privatization, public bodies treat citizens as consumers of data-driven services. In this article, I argue that treating citizens as consumers can be problematic for four reasons: (i) citizenship and consumer protection have different political and economic foundations; (ii) it relies on the heavy collection of personal data by both public bodies and private companies; (iii) it assumes—often incorrectly—that citizen-consumers in cities have choices and can refuse to give their consent to the data collection underlying the provision of smart public services; (iv) it excludes citizens who are less tech-savvy, do not fit in the vision of smart cities or wish to remain offline. Drawing on an interdisciplinary analysis of the literature on the liberalization of public services, smart cities and consumer protection, this article aims to contribute to the legal literature by shedding new light on the concept of “citizen-consumer” and its implications for the inclusiveness of public services.

Services Liberalization by Federations and Federal-Type Structures: What Approach to Sub-Central Measures?

The paper addresses an issue that has so far been left to little attention in literature dealing with international trade in services. It asks how services liberalization is conducted by countries that have a federal structure and where services are not regulated only on the level of the central government but also by various sub-national entities. Some of the most powerful nations, such as the United States and Canada, have divided competencies over services regulation. So does the European Union which due to its common trade policy can in its external trade relations be contrasted with federal states. The paper analyzes the different ways in which federations and other federal-type structures engage in international services liberalization by using the EU, US and Canada as examples. In order to shed more light on their treaty practice and to see to what extent sub-central levels of government appear in their services schedules, the paper reviews the GATS commitments as well as the services commitments that the EU, US and Canada have made in some of their recent PTAs. The paper shows that there are crucial differences in the way that these federal entities engage in international services liberalization. The paper also draws more far-reaching conclusions on the approach to take towards liberalization commitments by sub-central levels of government and assesses the effect that they have, or rather the effect that the lack of such commitments has, on the liberalization levels reached in modern trade agreements.

Deep and Not Comprehensive? What the WTO Rules Permit for a UK–EU FTA

AbstractWTO rules prohibit Free Trade Areas (FTAs) that provide tariff-free access or services liberalization in only one or a few sectors. In this sense, a narrow, sectoral approach to concluding an FTA between the EU and the UK would contravene WTO law. However, assuming the EU and the UK were able to agree a substantially broad tariff-free FTA, WTO rules would not prevent them from moving further to maintain the bulk of the benefits of the Customs Union and the Single Market in a few key sectors. They could establish customs union-like conditions by coordinating external tariffs in some sectors and agreeing on relaxed Rules of Origin (RoOs) administered lightly and Single Market-like access could be approximated through sectoral Mutual Recognition Agreements. Such an approach would enable continued deep integration, whose desirability has been signalled on both sides. It would fall short of current market access levels even in the selected sectors, and, in the case of tariff coordination, re-create some of the limits to an independent trade policy that Brexit aimed to remove. If the trade-off were deemed desirable, however, the approach could be reconciled with WTO rules including the ‘Most Favoured Nation’ requirement that equal treatment be awarded to all WTO Member States.

Service Trade Liberalization And Economic Growth

This paper empirically examines the relationship between services trade liberalization and economic growth. Services trade currently comprises approximately 20 percent of total world trade, with more than half of the world’s labor force employed in service sectors. The possibility that reducing barriers can enhance global production is increasingly receiving attention. The impact of liberalization on growth is empirically assessed by including services trade restrictiveness as the key variable of interest in cross-sectional estimations of a global production function. Income dummies were interacted with levels of services trade restrictiveness to discern variations of influence across countries at different income levels. Services trade restrictiveness is captured using a World Bank index for a pooled cross-section of countries. Robustness of results are evaluated using a similar services trade restrictiveness index recently constructed by the OECD for member countries. The results suggest that services trade liberalization has a positive impact on a country’s per capita GDP. This benefit of service liberalization is larger in countries with greater services export values. In addition, service liberalization in low income countries has a greater impact on per capita income levels than does service liberalization in high income countries. While positive and statistically significant, the scale of the effect appears small. The robustness of the results were tested using an alternate measure of services trade restrictiveness for OECD countries. These robustness results validated the benchmark results and also suggested, for high income countries, the liberalization of services trade may have a non-linear influence on per capita income growth. These findings underscore the importance of including service trade liberalization as a part of trade policy discussions and development agendas, as liberalization of services restrictions may stimulate growth in per capita income and highlights that removing the barriers to services trade can positively impact income levels, especially in low-income countries. Currently, policies surrounding services trade liberalization largely occur at the bilateral agreement level. However, as knowledge grows about the possible benefits of services trade liberalization, movement towards multilateral recommendations may be optimal.