Measuring the Cost of Barriers to Trade in Services
Author(s)
Dee, Philippa
Hanslow, Kevin
Pham, Tien Duc
Griffith University Author(s)
Year published
2012
Metadata
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To what extent can the traditional tools of trade policy analysis be used to analyse the economic costs of barriers to trade in services?
Traditional analysis of trade barriers has focused primarily on the effects of tariffs. These are discriminatory taxes levied on foreign-produced goods at the border of a country.
The Heckscher-Ohlin (HO) framework is a standard framework in which tariffs have been analyzed (Heckscher [1919] 1949; Ohlin 1933). This frame-work assumes perfect substitutability between domestically produced and foreign goods of the same type, fixed endowments of primary factors of production, and perfect mobility ...
View more >To what extent can the traditional tools of trade policy analysis be used to analyse the economic costs of barriers to trade in services? Traditional analysis of trade barriers has focused primarily on the effects of tariffs. These are discriminatory taxes levied on foreign-produced goods at the border of a country. The Heckscher-Ohlin (HO) framework is a standard framework in which tariffs have been analyzed (Heckscher [1919] 1949; Ohlin 1933). This frame-work assumes perfect substitutability between domestically produced and foreign goods of the same type, fixed endowments of primary factors of production, and perfect mobility of those factors between sectors within an economy. The framework has been extended to consider more than two goods and factors (Jones and Scheinkman 1977), the presence of a sector-specific factor of production (Mayer 1974; Mussa 1974), imperfect competition (Markusen 1981), increasing returns to scale (Melvin 1969) and product differentiation (Krugman 1979; Helpman 1981). However, barriers to trade in services are unlike tariffs. They are typically regulatory barriers, rather than explicit taxes. They need not discriminate against foreigners. Indeed, barriers to market access are often designed to protect incumbent firms from any new entry, be it by domestic or foreign firms. And barriers to services trade are not restricted to affecting the output of services firms. One particularly important category of barriers to services trade—restrictions on foreign direct investment by service firms—affects the use of primary factors. These restrictions are recognized in the General Agreement on Trade in Services (GATS) under the World Trade Organization (WTO), since this agreement recognizes commercial presence as one of the modes by which services are traded.
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View more >To what extent can the traditional tools of trade policy analysis be used to analyse the economic costs of barriers to trade in services? Traditional analysis of trade barriers has focused primarily on the effects of tariffs. These are discriminatory taxes levied on foreign-produced goods at the border of a country. The Heckscher-Ohlin (HO) framework is a standard framework in which tariffs have been analyzed (Heckscher [1919] 1949; Ohlin 1933). This frame-work assumes perfect substitutability between domestically produced and foreign goods of the same type, fixed endowments of primary factors of production, and perfect mobility of those factors between sectors within an economy. The framework has been extended to consider more than two goods and factors (Jones and Scheinkman 1977), the presence of a sector-specific factor of production (Mayer 1974; Mussa 1974), imperfect competition (Markusen 1981), increasing returns to scale (Melvin 1969) and product differentiation (Krugman 1979; Helpman 1981). However, barriers to trade in services are unlike tariffs. They are typically regulatory barriers, rather than explicit taxes. They need not discriminate against foreigners. Indeed, barriers to market access are often designed to protect incumbent firms from any new entry, be it by domestic or foreign firms. And barriers to services trade are not restricted to affecting the output of services firms. One particularly important category of barriers to services trade—restrictions on foreign direct investment by service firms—affects the use of primary factors. These restrictions are recognized in the General Agreement on Trade in Services (GATS) under the World Trade Organization (WTO), since this agreement recognizes commercial presence as one of the modes by which services are traded.
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Book Title
The WTO and Trade in Services
Volume
1
Subject
Applied Economics not elsewhere classified