Market Access for Small Versus Large Service Enterprises : The Preferential and Multilateral Trade Liberalization Tracks Compared

Political economy theories of international trade predict the convergence of trade policy preferences between small and large exporting enterprises within a sector. However, this convergence does not generally occur in service trade, which restricts the way a service provider is allowed to supply a service across borders. Services trade agreements differentiate mainly between modes that are 'linked' versus 'unlinked' to commercial presence. The former, which are generally used by large multinationals, were more liberalized in the Uruguay Round than the latter, usually preferred by small enterprises. By comparing the latest GATS offers with the new preferential services trade agreements of the 2000s, this paper explores the extent each liberalization track has been able to narrow the gap between market access given to the 'linked' versus 'unlinked' modes. It shows that whereas there continues to be a bias against the latter in both liberalization tracks due to higher political (economic) sensitivity, the new preferential trade agreements are able to narrow the gap between the market access granted to both 'linked' and 'unlinked' modes – bringing likely real liberalization especially to the latter – thus leveling the playing field between large and small enterprises