Lets talk about services trade policy!

When one talks about trade policy, protectionism and liberalisation, one tends to focus on goods and manufacturing. But there is a large segment of trade - services that misses the eye. What are the restrictions in the services sector. How have they been liberalised? Have they seen similar trends of protectionism like higher tariffs or export controls?

These issues have been addressed in this Vox EU piece titled "Services trade policy since the Great recession" which argues that though there have been liberlaising trends in certain sectors like finance and telecommunications, certain behind the border measures do exist that are not really liberalising.

To conclude, the last decade has seen steady and widespread liberalisation, but with a twist. While markets in services, e.g. finance and telecommunications, are increasingly free from explicit restrictions on entry and ownership, they are increasingly subject to greater regulatory scrutiny (e.g. economic needs tests, FDI screening), especially in higher income economies. This raises several questions for future analysis. Does this type of measure reflect ‘learning-by-liberalising’, in that lessons have been learnt on the need to complement openness with more stringent prudential regulation? Do they reflect a shift analogous to the reversal of openness in goods trade policy, ostensibly on security grounds, but possibly in response to the increased competitiveness of developing economies’ services firms? And do they signal a trend towards de jure openness but de facto discretionary policy, in particular at the point-of-entry stage (e.g. through FDI)? These policy trends deserve further analysis.

In intangible nature of services trade has always been a difficult issue to deal with it. Data on services trade, sector wise growth and barriers to services trade have been far more complex than goods trade. Further, immigration law intertwines with movement of people across borders complicating the issue even further. With services sector increasingly constituting the GDP of many emerging economies, a rigorous analysis of services trade policy, markets and impediments would help nations further their trade agendas. 

I found the "learning-by-liberalising" concept interesting - tightening conditions of providing the services based on lessons of history of liberalisation. However, there is a limit to learning by liberalising i.e one cannot go back on commitments in the GATS schedule or in bilateral trade agreements based on how liberalisation has impacted the domestic sector. However, the tightening could be in norms and regulations equally applicable to domestic players.This is more like calibrtaed liberalisation in a nuanced way!