The Political Economy of Services in Regional Trade Agreements

Do the services commitments that countries have made in their post-Uruguay Round regional trade agreements (RTAs) indicate the types of concessions that they would be willing to multilateralise in the General Agreement on Trade in Services (GATS)? While there are important legal and economic dimensions to ponder in answering this question, considerations of political economy must also be taken into account. This paper focuses on issues in political economy that underlay RTAs in general, and especially the specific commitments and concessions that countries make on trade in services. It examines in detail the way that considerations of political economy have helped to shape the RTAs of Chile, Japan, the European Union and the United States. These four case studies help to develop and test a series of hypotheses regarding the international and domestic political factors that influence why RTAs are negotiated in the first place, between what kind of countries and with what kind of content, especially with respect to their provisions affecting services. The analysis rejects on a preliminary basis the hypothesis that RTAs create constituencies opposed to multilateral liberalisation, and finds empirical support for other hypotheses that are more multilateral-friendly.