Deep regional integration is accompanied by harmonization and coordination of regulatory regimes and policies. Such developments may result in the promotion and facilitation of trade in services, since liberalization of trade in services requires regulatory reforms to reduce the market segmenting effect of domestic policies. To provide a clue to the question of how far regional integration agreements have advanced, this paper estimates the effects of regional integration on trade in nine services by using a gravity model. The results show that the existing regional blocs are at different stages. We identify that the efforts of the EU towards deep integration have had a significant impact on trade in services between members, while NAFTA, Mercosur and Andean trade less with their own members than their potential as suggested by income and geography.

Executive Summary

I. Introduction

II. Services Liberalization in RIAs
1. EU
2. NAFTA
3. ASEAN
4. MERCOSUR
5. ANDEAN

III. Empirical Analysis

IV. Results

V. Concluding Remarks

References