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Liberalizing global trade in Mode 5 services: How much is it worth?

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  • Antimiani, Alessandro

    (DG Trade)

  • Cernat, Lucian

    (DG Trade)

Abstract

The growing role of services inputs in manufacturing exports ("services in boxes") has led to a proposal for a new modality of exporting services (mode 5 services) beyond the four modes of supply in the GATS. For the vast majority of WTO members the significance of mode 5 services is considerable, both in exports and imports. However unlike traditional GATS services trade, mode 5 services "in boxes" pay tariffs. This paper estimates that the global GDP gains from liberalizing mode 5 services at multilateral level could reach up to €300 billion by 2025 and world trade could increase by over €500 billion. The paper also examines the interplay between mode 5 services trade and the growing importance of future technological developments (e.g. software, digitalisation, the Internet of Things). Our preliminary set of results shows that a Mode 5 Services Initiative is important not only because of the positive impact it would have on global trade flows but also because it would facilitate trade-led technological progress in all regions of the world.

Suggested Citation

  • Antimiani, Alessandro & Cernat, Lucian, 2017. "Liberalizing global trade in Mode 5 services: How much is it worth?," DG TRADE Chief Economist Notes 2017-4, Directorate General for Trade, European Commission.
    • Handle: RePEc:ris:dgtcen:2017_004
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    Cited by:

    1. Carmen Díaz‐Mora & Erena García‐López & Belén González‐Díaz, 2022. "Bilateral servicification in global value chains and deep trade agreements," The World Economy, Wiley Blackwell, vol. 45(8), pages 2510-2531, August.
    2. Eduardo A. Haddad & Inácio F. Araújo, 2021. "The internal geography of services value‐added in exports: A Latin American perspective," Papers in Regional Science, Wiley Blackwell, vol. 100(3), pages 713-744, June.
    3. Asimakopoulos, Grigorios & Revilla, Antonio & Rodríguez, Alicia, 2023. "International R&D sourcing, innovation and firm age: The advantage of ‘born-international sourcers’," Technovation, Elsevier, vol. 122(C).
    4. Cernat, Lucian & D'Andrea, Barbara & Liberatore, Antonella & Maurer, Andreas & Wettstein, Steen, 2018. "Towards a Global Data Set on Trade in Services By Sector and Mode of Supply," Conference papers 332924, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Wettstein, Steen & Liberatore, Antonella & Magdeleine, Joscelyn & Maurer, Andreas, 2019. "A Global Trade In Services Data Set by Sector and by Mode of Supply (TISMOS)," Conference papers 333058, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    Mode 5 services; international trade; economic modelling;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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