OECD Trade Policy Papers

This series is designed to make available to a wider readership selected trade policy studies prepared for use within the OECD.

NB. No. 1 to No. 139 were released under the previous series title OECD Trade Policy Working Papers.


The Impact of Services Trade Liberalisation on Trade in Non-Agricultural Products

This study finds that trade in services contributes to a broader services supplier base that supports competitiveness in high-technology and high-value added manufacturing. It is shown that with low, but still significant trade costs in services, large countries have a comparative advantage for services-intensive manufactured goods, an advantage that is enhanced if the country also produces intermediate services more effectively or has lower barriers to entry for services suppliers. Countries with superior organisational technology (using producer services more effectively) will strengthen their comparative advantage in manufacturing following services trade liberalisation. The impact of services trade liberalisation on trade in manufacturing is non-linear. Until trade costs have reached a threshold level the trade response is quite modest. Consequently, going the last mile of services trade liberalisation, including lowering regulatory barriers, will have the largest impact. Exports of labour-intensive manufactures require a host of supporting services and the need for these services has increased over time due to rapidly changing consumer tastes and growing consumer awareness of health, safety and social standards. In order to support industrial development, developing countries need to focus their services trade policy not only on offensive interests, but also on ensuring that local manufacturers have the best possible access to services. Improving market access in telecommunications and business services; particularly legal services, accounting, advertising and technical consulting services would have the largest impact.

English Also available in: French

Keywords: linkages, services trade liberalisation, general equilibrium
JEL: F12: International Economics / Trade / Models of Trade with Imperfect Competition and Scale Economies; Fragmentation; F14: International Economics / Trade / Empirical Studies of Trade; F13: International Economics / Trade / Trade Policy; International Trade Organizations
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error