The Economic Structure of International Trade-in-Services Agreements

The existing economics literature on international trade agreements focuses on tariff agreements covering trade in goods and explains core features of the General Agreement on Tariffs and Trade (GATT). Tariffs play almost no role in services markets, however, and the literature cannot account for the strikingly different approach to trade liberalization in agreements such as the World Trade Organization's General Agreement on Trade in Services (GATS). We develop a model through which key features of GATS, including its emphasis on deep integration can be understood. And we use this model to suggest that there may also be a middle ground for services trade liberalization between the GATS deep-integration approach and the traditional shallow-integration approach of GATT.

Automated summary

The existing economics literature focuses on tariff agreements for trade in goods, but tariffs have little impact on services markets. A model has been developed to understand key features of GATS and suggest a middle ground for services trade liberalization between deep integration and the traditional shallow integration approaches.