Edited by Pierre Sauvé and Anirudh Shingal
Chapter 3: Do negotiated agreements foster trade in services? Evidence from PTAs
With an increasing number of preferential trade agreements (PTAs) covering trade in services, this chapter explores the empirical impact of PTAs on services trade. To the best of our knowledge, this is the first attempt in the literature that endogenizes the impact of services preferentialism in estimating trade effects and also looks at anticipation effects. The chapter also adds to the literature by distilling the trade effects of PTAs into those emanating from services and "goods only" agreements and further confirms complementarities between the two. The results suggest a trade effect of 15% from having a services accord alone, while the total incremental impact of a "goods only" agreement is found to be 7.6%. The services trade effect increases to 59.7% once anticipation effects of services accords are included and such analysis also suggests that services agreements seem to have a significant "announcement or signalling effect". Key words: Services trade, PTAs, gravity model, endogeneity, North-South agreements JEL Classification: F10, F13, F15
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