Transcript Slides on regionalism

Services Trade
Restrictiveness Index
TFSITS meeting 19
September 2007
Are services non-tradable??
Services share of GDP, employment and trade, OECD
80
70
60
50
Share of total trade
Share of GDP
Share of employment
40
30
20
10
19
70
19
71
19
72
19
73
19
74
19
75
19
76
19
77
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80
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99
20
00
20
01
20
02
20
03
0
What is a trade restrictiveness
index (TRI)?
• The simplest possible
TRI:
TRI 
T 
t

i
1
1 T
i
i
i i
1
• TRI =1 when T =0
• TRI= 0 when T =∞
• ti has to be tariff
equivalent;
• What should be the
weights θi?
Conceptual difficulties with STRI
• Trade barriers are behind the border
– Variable trade costs can be converted to a tariff
equivalent;
– Recurring fixed costs usually cannot be converted to a
tariff equivalent;
– Entry barriers (sunk costs) cannot be converted to a
tariff equivalent;
• Four modes of supply;
– Complements?
– Substitutes?
– Independent?
Why do we need services trade
data to develop the STRI?
• To identify trade barriers:
– Services trade barriers are not always explicit;
– Statistical analysis of which regulatory
measures correlate systematically with trade
flows – by mode;
• To assess elasticities of substitution
between modes;
• To assign weights to the trade barriers
– NB: endogeneity!
Coverage
• Countries
– OECD Members;
– BRICS?
– New members?
• Sectors:
– Pilot phase: telecommunications,
construction, business services
– Ultimately all services sectors
What kind of data do we need?
• BOP statistics by sector and partner country, would it be
possible to:
– Break down the data by mode?
– Break down data on Business services by sub-sector?
– Separate services from building material for construction
services?
– Provide guidance on how to deal with trade in
telecommunications? (services entering/disappearing over time,
large changes in prices)
– Fill in the gaps in the trade matrix?
• FATS data: Sales by foreign affiliates by sector and
partner countries;
– NB: The ultimate owner of the MNE;
– Fall-back position: firm-level data.
Your advise and contributions
are highly welcome!
Thank you for your attention.