Services Trade Restrictiveness Index

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Services Trade Restrictiveness Index

• TFSITS meeting 19 September 2007

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Are services non-tradable??
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What is a trade restrictiveness index (TRI)?

• The simplest possible TRI

• TRI 1 when T 0
• TRI 0 when T 8
• ti has to be tariff equivalent
• What should be the weights ?i?

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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?

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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!

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Coverage

• Countries
• OECD Members
• BRICS?
• New members?
• Sectors
• Pilot phase telecommunications, construction,
  business services
• Ultimately all services sectors

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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/disappearin
  g 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.

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Your advise and contributions are highly welcome!

• Thank you for your attention.