The Services Trade Restrictiveness Index : Applications in Quantitative Assessments of Trade Agreements

The development of the Services Trade Restrictiveness Index (STRI), first published by the OECD in 2014, launched a fruitful period in applied research on services trade. Applied as a template to the text of trade agreements, it enabled a specific quantification of the depth of liberalization of services trade entailed by commitments compared to the applied services trade regime of the parties. When combined with the parallel quantification of the parties’ trade commitments under the General Agreement on Trade in Services (GATS) in the form of the “GATS Trade Restrictiveness Index” (GTRI), it provided a measure of the “water in the GATS”. This served to quantify the uncertainty about future terms and conditions of market access, insofar as parties reserve the right to revert to their (less open) GATS commitments. Meanwhile, the breakdown by services trade modes, allows the use of the Mode 3 segment of the STRI to provide a sharper and more up-to-date quantification of the terms and conditions for foreign direct investment under other available indexes of investment restrictiveness. This goes both for services sectors and, through the horizontal elements, for goods sectors as well. For practitioners engaged in quantifying the impact of trade agreements the STRI/GTRI framework sharpened the understanding of the economic impacts of modern trade agreements; for trade negotiators, it helped shed light on the true level of ambition of services trade chapters; for economists, it opened up a new avenue of exploration of the role of uncertainty in shaping economic activity; and for public policy it greatly improved the explainability of services trade agreements and their impacts. The launch of the STRI was a truly seminal event that underscored the symbiosis between theory and measurement