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GTAP Resource #1518

"Market access and competition in the service sector"
by Francois, Joseph and Ian Wooton

This paper is concerned with the relationship between the traditional concept of market access in goods sectors and the degree of competition in the service sector. In particular, we examine the interaction between trade in goods and the degree of competition in the “margin” services that facilitate the interaction between the exporter and the final consumers. This includes domestic shipping and logistic services, of course, as well as the wholesale and retail sectors and other links in the distribution chain that carries imported goods to the consumer.
We focus on the following questions. Does national competition policy in the distribution sectors matter for the level of trade in goods? (That is, does “non-tradables” competition policy have trade effects?) Are the gains from trade affected by the degree of service-sector competition? What are the implications of service-sector competition for the interpretation of tariff concessions (that is, market-access concessions) made during trade negotiations? How might market-access concessions under the GATS in the margin sectors (assumed to involve a mix of profit shifting and increased competition) interact with market access in goods trade? Finally, is there a relationship between the traditional optimal-tariff arguments and the optimal degree of domestic competition? GATT-related events and circumstance related to this issue include the Fuji-Kodak dispute about domestic distribution cartels, involving the U.S. and Japanese governments and the perpetual debate about antitrust exemptions within the EU Single Market(s) for autos. They also lurk behind the retail distribution system and its impact on trade in both Switzerland and Japan, and behind the German experience with retailing cartels (and the implications of Wal-Mart-type entry).

We explore these issues both empirically and theoretically. Our results point to potentially important linkages between service sector competition, and the degree of effective market access affecting goods trade. This, in turn, suggests linkages between GATS-based liberalization and goods trade that go well beyond current policy analyses and discussion

Resource Details (Export Citation) GTAP Keywords
Category: 2004 Conference Paper
Status: Published
By/In: Presented at the 7th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2004
Created: Francois, J. (5/3/2004)
Updated: Ahmed, S. (9/13/2004)
Visits: 2,179
No keywords have been specified.

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