Trade Facilitation in Services : Concepts and Empirical Importance

This paper examines the concept of trade facilitation in services from the perspective of the recent literature on the determinants of services trade. The aim is to conceptualize trade facilitation in this area as a dimension of international integration beyond the baseline restrictiveness of policy, as captured by indicators of discriminatory market access. The analysis focuses on the role of governance structures, institutions, and transparency in shaping the environment for trading in services internationally. In addition to examining these factors, the paper provides some novel empirical estimates. Using a gravity model, the analysis finds that the ad valorem equivalents of common measures of institutional quality, governance, and transparency are larger relative to measures of sheer policy restrictiveness, frequently a significant multiple. The paper also shows that the ad valorem equivalents of data restrictions are of similar magnitude to policy restrictions in services. The conclusion is that framing discussions of trade facilitation in services around the concept of reducing trade costs -- specifically those stemming from areas where improvement is needed in governance, institutions, and transparency -- could potentially bring significant benefits in increased integration of the global services economy