3 - Regulatory Bindings, Policy Uncertainty, and Market Access in Services

Summary

Unlike trade in goods, market access commitments for services usually comprise regulatory measures as opposed to trade taxes. In other words, they are generally about non-tariff measures (NTMs). In some sectors foreign access may be limited or completely prohibited through quantitative restrictions, e.g. bans on foreign provision of broadcasting or transport services, or requirements that government officials fly on the national airline. More generally, services activities are often regulated. Differences in regulation may then result in additional costs for foreign providers when they contest a market. Because they involve sale of intangibles in the form of service flows rather than physical goods, there is usually some form of direct interaction between service producers and customers. This means that establishment is more likely to be important for service exports than goods exports, resulting in an effective mix of cross-border and FDI related regulatory measures when we discuss market access in services.