CEPII, Recherche et Expertise sur l'economie mondiale
Which import restrictions matter for trade in services ?

Julien Gooris
Cristina Mitaritonna

 Highlights :
  • This study uses the recent database of detailed import restrictions published by the World Bank to assess the impediments to trade services based on bilateral sector-level service flows from the World Trade organization.
  • The diversity of the import regulations across sectors and importers create heterogeneous constraints on services flows with some threshold effects.
  • Minor restrictions, in comparison to restriction-free environments, produce a trade-facilitating effect in certain sectors as regulations may address market imperfections.
  • Based on the restrictions that applies in each import country and sector, we derive ad-valorem tariff equivalents.

 Abstract :
This study exploits rich databases of services trade and import restrictions to estimate the effects of discrete restrictiveness levels on bilateral services flows using a gravity model, and to derive tariff equivalents in three service sectors (Other Business Services, Banking and Insurance). We preserve the discrete nature of the restrictions to import, which are provided by the World Bank - WB (see Borchert et al., 2014). For each sector-country combination, we evaluate restrictiveness using four discrete levels of restrictiveness, from totally open to closed. This approach allows us track the effect of the specific import restrictions in place. We highlight their non-linear impact on services flows showing threshold effects and the trade stimulating effect of minor import restrictions on a restriction-free environment. Finally we derive tariff equivalents directly from the impact of applied restrictions.

 Keywords : services trade | regulatory protection | gravity model | ad-valorem tariff equivalents

 JEL : F13, L80
CEPII Working Paper
N°2015-33, December 2015

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 Fields of expertise

Trade & Globalization