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The trade-induced effects of the Services Directive and the country of origin principle

Author

Listed:
  • Arjan Lejour

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Henk Kox
  • Roland de Bruijn

Abstract

The proposed Services Directive by the European Commission could increase intra European trade in commercial services by 30 to 60 percent. This paper analyses the welfare effects of the trade growth using an applied general equilibrium model WorldScan. Read also the accompanying press release.It shows that GDP could be raised by 0.3 to 0.7 percent and consumption by 0.5 to 1.2 percent in the European Union as a whole. These results could only be realised if the Services Directive is implemented including the country of origin principle. If this principle is excluded from the directive, trade increases only by 20 to 40 percent. The trade-induced welfare effects are correspondingly lower. GDP could rise by 0.2 to 0.4 percent and consumption by 0.3 to 0.7 percent in the EU as a whole. The country-specific effects vary: most of the new Member States will experience larger gains than the average Member State because their services trade is now still hampered by relatively large regulatory barriers in these countries.

Suggested Citation

  • Arjan Lejour & Henk Kox & Roland de Bruijn, 2006. "The trade-induced effects of the Services Directive and the country of origin principle," CPB Document 108, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:docmnt:108
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    References listed on IDEAS

    as
    1. Henk Kox & Arjan Lejour, 2005. "Regulatory heterogeneity as obstacle for international services trade," CPB Discussion Paper 49, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
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    5. Henk Kox & Arjan Lejour & Raymond Montizaan, 2004. "Intra-EU trade and investment in service sectors, and regulation patterns," CPB Memorandum 102, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Ruud de Mooij & Paul Tang, 2003. "Four futures of Europe," CPB Special Publication 49, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Arjan Lejour, 2003. "Quantifying four scenarios for Europe," CPB Document 38, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Giuseppe Nicoletti & Stephen S. Golub & Dana Hajkova & Daniel Mirza & Kwang-Yeol Yoo, 2003. "Policies and International Integration: Influences on Trade and Foreign Direct Investment," OECD Economics Department Working Papers 359, OECD Publishing.
    9. Paul Conway & Véronique Janod & Giuseppe Nicoletti, 2005. "Product Market Regulation in OECD Countries: 1998 to 2003," OECD Economics Department Working Papers 419, OECD Publishing.
    10. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
    11. Arjan Lejour & Paul Veenendaal & Gerard Verweij & Nico van Leeuwen, 2006. "Worldscan; a model for international economic policy analysis," CPB Document 111, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Ruud de Mooij & Paul Tang, 2003. "Four futures of Europe," CPB Special Publication 49.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Arjan Lejour & Ruud de Mooij & Richard Nahuis, 2001. "EU enlargement: economic implications for countries and industries," CPB Document 11, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Roland de Bruijn, 2006. "Scale Economies and Imperfect Competition in WorldScan," CPB Memorandum 140, CPB Netherlands Bureau for Economic Policy Analysis.
    15. George Gelauff & Arjan Lejour, 2006. "Five Lisbon highlights; the economic impact of reaching these targets," CPB Document 104, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Giuseppe Nicoletti, 2001. "Regulation in Services: OECD Patterns and Economic Implications," OECD Economics Department Working Papers 287, OECD Publishing.
    17. Henk Kox & Arjan Lejour & Raymond Montizaan, 2004. "The free movement of services within the EU," CPB Document 69, CPB Netherlands Bureau for Economic Policy Analysis.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lejour, Arjan & Rojas-Romagosa, Hugo & Verweij, Gerard, 2008. "Opening services markets within Europe: Modelling foreign establishments in a CGE framework," Economic Modelling, Elsevier, vol. 25(5), pages 1022-1039, September.
    2. Metka Stare & Andreja Jaklič, 2008. "Transition, regulation and trade in services," The Service Industries Journal, Taylor & Francis Journals, vol. 28(3), pages 277-290, April.
    3. Fritz Breuss, 2006. "Teilstudie 4: Europäische Wirtschaftspolitik: Binnenmarkt, WWU, Lissabon, Erweiterung," WIFO Studies, WIFO, number 27443, January.
    4. Vojtech Olbrecht, 2016. "Effect of the Service Directive on Wholesale and Retail Companies: Diff in Diff in Diff Evidence," MENDELU Working Papers in Business and Economics 2016-61, Mendel University in Brno, Faculty of Business and Economics.
    5. repec:wsr:wpaper:y:2012:i:087 is not listed on IDEAS
    6. Hagemejer, Jan & Michalek, Jan J. & Michałek, Tomasz, 2014. "Liberalization of services in Europe: Polish perspective on economic implications of the Services Directive," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 211-225.
    7. Bianka Dettmer, 2012. "The European Union's service directive: Contrasting ex ante estimates with empirical evidence," Jena Economics Research Papers 2012-019, Friedrich-Schiller-University Jena.
    8. Gillson,Ian John Douglas & Molinuevo,Martin & Saez,Juan Sebastian, 2020. "Trade Facilitation in Services : A Conceptual and Empirical Analysis," Policy Research Working Paper Series 9233, The World Bank.
    9. Kox, Henk L.M. & Lejour, Arjan, 2006. "Dynamic effects of European services liberalisation: more to be gained," MPRA Paper 3751, University Library of Munich, Germany.
    10. repec:bla:jcmkts:v:47:y:2009:i::p:693-717 is not listed on IDEAS
    11. Maryla Maliszewska & Irina Orlova & Svitlana Taran, 2009. "Deep Integration with the EU and its Likely Impact on Selected ENP Countries and Russia," CASE Network Reports 0088, CASE-Center for Social and Economic Research.
    12. Nico van Leeuwen & Arjan Lejour, 2006. "Bilateral Services Trade Data and the GTAP database," CPB Memorandum 160, CPB Netherlands Bureau for Economic Policy Analysis.
    13. de Bruijn, Roland & Kox, Henk & Lejour, Arjan, 2008. "Economic benefits of an Integrated European Market for Services," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 301-319.
    14. Jan Hagemejer & Jan Michałek & Tomasz Michałek, 2010. "Implications of the Doha Round negotiations in services for Poland," Bank i Kredyt, Narodowy Bank Polski, vol. 41(1), pages 5-30.
    15. Henk Kox & Arjan Lejour, 2006. "The Effects of the Services Directive on Intra-eu Trade and fdi," Revue économique, Presses de Sciences-Po, vol. 57(4), pages 747-769.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L8 - Industrial Organization - - Industry Studies: Services

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