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How Do the "GATS-Plus" and "GATS-Minus" Characteristics of Regional Service Agreements Affect Trade in Services?

Nianli Zhou, John Whalley

NBER Working Paper No. 20551
Issued in October 2014
NBER Program(s):The International Trade and Investment Program

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".

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Document Object Identifier (DOI): 10.3386/w20551

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