Intra-EU services trade and heterogeneous occupational regulation - Evidence from the professional services sector

This paper shows that evidence form existing research results on positive trade effects of a more homogeneous professional regulation cannot be transferred without restrictions to intra-European trade with professional services in the sectors of accounting, architectural, engineering and legal activities. In line with the related literature, this paper uses regulatory indicators on trade restriction to capture potential trade effects of heterogeneous occupational regulation between the Member States of the EU within a gravity framework. If the OECD "Services Trade Restrictiveness Index for cross-border trade in services" (OECD-STRI) is used to capture remaining regulatory differences between the Member States, there is no indication for such positive trade effects. However, this lack of findings may be due to the fact that the OECD-STRI indicator simply does not cover the relevant professional regulation for trade in Europe. Nevertheless, also the inclusion of the recently updated modified version of this indicator for intra-European trade (intra-EEA STRI) does not hint to extensive trade barriers due to the remaining national regulatory differences in professional services. As an alternative to the composite indicators of the OECD, I propose a simple measure of regulation, which divides the countries according to whether membership in a professional chamber is mandatory or not. This indicator captures the central dividing lines of professional regulation in the Member States of the EU between direct state supervision and indirect professional supervision in professional self-administration. Under this specification it is shown that there are indeed some interface problems in the trade of professional services in the EU internal market. However, the results do also indicate that a mandatory chamber system itself has no negative impact on intra-EU trade in professional services.