Granting preferential market access in services sequentially versus jointly with goods

Abstract

Despite the cost and resource-effectiveness of joint trade negotiations and complementarities between goods and services-trade flows, more than 12% of the 132 WTO-notified services-trade agreements (STAs) in force until August 2015 were entered into effect sequentially to goods-trade accords. This stylised fact motivates our study of the determinants of joint versus sequential negotiation/accession of goods and services accords, a subject hitherto unexplored in the growing literature on the determinants of STA membership. Our results suggest larger marginal effects of fundamental economic, geographic, institutional, doing business and services regulatory factors on the propensity of joint negotiation/accession compared to STA formation alone. Moreover, cultural-distance variables are only found to affect the likelihood of joint preferential liberalisation of goods and services trade, without influencing STA-only membership.