Working Paper: NBER ID: w20551
Authors: Nianli Zhou; John Whalley
Abstract: Preferential liberalization of trade in services is a central feature of the new regionalism. "GATS-Plus" and "GATS-Minus" have become the distinctive characteristics of the service RTAs and this paper aims to investigate and distinguish the different effect of the "GATS-Plus" and "GATS-Minus" components of RTAs on the service trade . The results of the empirical research by using the gravity equation either with time-varying exporter and importer fixed effects or with the specific exporter and importer fixed effect and year fixed effect both indicate : (1) belonging to a RTA (both "only goods" RTA and "service" RTA) can increase the bilateral service trade between the trading-pairs significantly. (2) almost all the "GATS-plus" and "GATS-neutral" commitments either on market access or on national treatment made by trading-pairs with each other under service RTAs have significantly positive effect on bilateral service export. (3) the commitments of "GATS-minus" characteristic do not have significant negative effects on bilateral service export because "GATS-minus" treatment can be neutralized to some extent by two main preferential erosion mechanisms under the RTAs: "liberal rule of origin" and "non-party MFN provision".
Keywords: Regional Trade Agreements; GATSplus; GATSminus; Service Trade; Gravity Model
JEL Codes: F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| RTA membership (R19) | bilateral service exports (F10) |
| goods RTA (L68) | bilateral service exports (F10) |
| service RTA (R59) | bilateral service exports (F10) |
| gatsplus commitments (F13) | bilateral service exports (F10) |
| gatsneutral commitments (F13) | bilateral service exports (F10) |
| gatsminus commitments (F53) | bilateral service exports (F10) |