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Services in the Trans-Pacific Partnership: What Would Be Lost?

Date: 2/2017
Executive Unit: World Bank Group

Date: 2/2017

Executive Unit: World Bank Group

The fate of the Trans-Pacific Partnership (TPP) hangs in balance. An evaluation of what it offers could lead to more informed decisions today and influence the shape of future negotiations. The services component in particular has been hailed as a one of the agreement’s major accomplishments. The World Bank’s Global Economic Prospects 2016 cites research by Petri and Plummer (2015) suggesting that about one quarter of the gains from the agreement, estimated to be on average 1.4 percent of participating countries’ GDP by 2030, would come from services liberalization. The USTR website states that the “TPP lifts complex restrictions and bans on access for U.S. businesses—including many small businesses—that export American services like retail, communications, logistics, entertainment, software and more.” US exports of services are projected to increase by $149 billion, and exports of all TPP members by $225 billion by 2030 (Hufbauer, 2016, Petri and Plummer, 2016). This paper takes a closer look at what precisely the TPP accomplished in services.

There are three possible criteria for assessing how much value the TPP added. The first and least demanding is the multilateral benchmark, in terms of the rules and commitments agreed during the WTO’s Uruguay Round in the mid-1990s, and the offers made in the early 2000s during the unfinished Doha negotiations. A second, stricter standard is the openness that each TPP country had already promised one or more of the other TPP countries as part of the 29 preferential trade agreements (PTAs) they had signed prior to the TPP. Even though a comparison of commitments across negotiating fora would tell us how much additional legal security the TPP offers, it would not tell us whether the agreement produced explicit liberalization. The third and most meaningful comparison is between TPP commitments and actual policy in the TPP members.

In order to make each of these comparisons, we created a new public database of information on the TPP countries legal commitments and applied policies in five major services sectors – financial, basic telecommunications, retail distribution, transport and selected professional services. This database includes: information on TPP countries’ commitments under the TPP and under earlier multilateral (WTO) and preferential trade agreements; and information on their applied policies in 2008, just after the TPP negotiations began, and in 2015, just before the negotiations concluded.

In Section II, we discuss the services-specific disciplines in the TPP. Section III describes the data sources and the measurement of services policies and commitments. Section IV provides a comparative analysis of TPP commitments. Section V describe the other rules in the agreement that matter for services trade, and Section VI concludes.

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