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Services policies in transition economies: on the EU and WTO as commitment mechanisms

Published online by Cambridge University Press:  19 October 2006

FELIX ESCHENBACH  and
BERNARD HOEKMAN
FELIX ESCHENBACH
Affiliation:
Groupe d'Economie Mondiale, Institut d'Etudes Politiques, Paris
BERNARD HOEKMAN
Affiliation:
World Bank and CEPR
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Abstract

We analyze the extent to which the EU-15 and 16 transition economies used the WTO General Agreement on Trade in Services (GATS) to commit to service sector policy reforms. GATS commitments are compared with the evolution of actual policy stances over time. While there is substantial variance across transition economies on both actual policies and GATS commitments, we find an inverse relationship between the depth of GATS commitments and the ‘quality’ of actual services policies as assessed by the private sector. In part this can be explained by the fact that the prospect of EU accession makes GATS less relevant as a commitment device for a subset of transition economies. However, for many of the non-EU accession candidates the WTO seems to be a weak commitment device. One explanation is that the small size of the markets concerned generates weak external enforcement incentives. Our findings suggest greater collective investment by WTO members in monitoring and transparency is needed to increase the benefits of WTO membership to small countries.

Type
Research Article
Information
World Trade Review , Volume 5 , Issue 3 , November 2006 , pp. 415 - 443
Copyright
© Felix Eschenbach and Bernard Hoekman

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Footnotes

We are grateful to Will Martin, Patrick Messerlin, two referees and an Executive Board member for comments and suggestions, and to Rolf Adlung for assistance with GATS schedules. This paper was written while Hoekman was visiting the Groupe d'Economie Mondiale, Institut d'Etudes Politiques, Paris. The views expressed are personal and should not be attributed to the World Bank.