Search Results

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.

Little analytical attention has so far been devoted to the issue of rules of origin in a services and investment context. This chapter wades into this largely uncharted territory by advancing a few thoughts on a range of economic and legal considerations arising from the way in which various agreements seek to determine and condition who gets to benefit from services trade and investment liberalization. It focuses on the practice of preferential and non-preferential services trade liberalization as found in various bilateral and regional trade and investment agreements as well as the World Trade Organization’s (WTO) General Agreement on Trade in Services (GATS). It addresses a range of conceptual issues relating to services trade that impinge upon the design and implementation of rules of origin for services. The discussion draws attention to a number of salient characteristics of trade in services that limit the usefulness of concepts and approaches to origin developed in the context of trade in goods. Attention is also drawn to a number of economic considerations that should inform the design of rules of origin for services trade to minimize the potentially adverse effects of trade and investment diversion, and maximize the economy-wide gains in allocative efficiency that well-designed services liberalization can entail.

In the last 20 years, PTAs have kept increasing in both number and scope. Deep integration differs from traditional integration agreements in its scope, motives, and modalities of implementation. It often encompasses other areas that can be found in some North-South PTAs like competition, labor, or environment. Deep integration is as much about trade as it is about other dimensions of economic management and public policy. Thus, its motives and goals are often closer economic and political union rather than simply free trade. The domestic regulatory dimension is at the heart of modern PTAs. Since deep integration is often multilateral in nature, pursuing a faster and deeper liberalization through PTAs becomes a building rather than a stumbling block towards free multilateral trade. Finally, deep integration agreements should be understood as “living agreements,” where implementation and the process of integration are as important as agreeing rules of preferential liberalization up front.