Regionalism in Services Trade

Abstract This chapter reviews the recent wave of regional trade agreements (RTAs), to assess the benefits and costs of alternative approaches and identify the policy choices developing countries will face in negotiating regional agreements. The chapter focuses on three core issues: (1) whether services trade differs sufficiently from goods trade as to require different policy instruments and approaches in the context of preferential liberalization, whether and how RTAs may allow deeper forms of regulatory cooperation to occur, and the effects on non-members; (2) lessons learned from the practice of preferential liberalization in services in terms of market access and rule design; and (3) the legal dimension of the policy interface, focusing on a number of aspects of rule-design, including the strengths and weaknesses of existing multilateral disciplines on regional approaches to services trade and investment liberalization. A summary is provided of Article V (Economic Integration) of the GATS, including a discussion of the extent to which its disciplines are likely to allow third countries to object to provisions in proposed agreements that are detrimental to their interests. The chapter concludes with a discussion of issue areas that parties to prospective RTAs in services will need to confront and seek novel solutions to in advancing the process of services liberalization and rule-making at the regional level. The addendum to the chapter includes a discussion of liberalizing services trade in ASEAN region and in Latin America.