SERVICES TRADE RESTRICTIVENESS: PROFESSIONAL SERVICES

1. SERVICES TRADE RESTRICTIVENESS: PROFESSIONAL SERVICES OECD Experts Meeting on the Services Trade Restrictiveness Index (STRI) Paris, 2-3 July 2009 Massimo Geloso Grosso and Rainer Lanz OECD Trade and Agriculture Directorate

2. OUTLINE • Review of the methodology • Results • Robustness checks • Relevance for trade • Conclusions

3. IDENTIFICATION OF BARRIERS • Identification according to three criteria • Regulations covered by the GATS framework • Restrictions included in RTAs • Regulations identified as relevant at the 2008 OECD Experts Meeting on Business Services • Main sources of information • OECD PMR • OECD TAD survey • OECD FDI Regulatory Restrictiveness Index

4. CATEGORIES OF MEASURES • Restrictions on foreign ownership and other market entry conditions • Restrictions on the movement of people • Discriminatory measures, standards and equivalence • Price controls and regulations on market behaviour • Barriers to competition • Regulatory transparency and licensing/permit systems

5. CLASSIFICATION OF RESTRICTIONS • STRI according to the GATS framework • Market access and national treatment • Domestic regulation and other • Modes of supply • Establishment of firms versus their ongoing operations • Discriminatory versus non-discriminatory measures

6. SCORING AND WEIGHTING • All variables are transformed into binary • 95% of the measures are binary • Expert judgment forms the basis for the weighting scheme • Weights to each category of measures according to the ranking at the Experts Meeting on Business Services • Equal weights have been applied to measures within each category • Other weighting schemes have been employed as robustness checks • Principal component analysis • Equal weights • Random weights

7. AGGREGATION

8. STRI FOR PROFESSIONAL SERVICES

9. STRI BY CATEGORY OF RESTRICTIONS

10. STRI ACCORDING TO THE GATS FRAMEWORK

11. STRI BY OTHER CLASSIFICATIONS

12. STRI BY PROFESSIONAL SERVICES SUBSECTOR

13. ROBUSTNESS CHECKS AND RELEVANCE FOR TRADE • STRI robust to all alternative weighting schemes • Spearman rank correlations of weighting schemes • Equal weights: 0.84 • PCA weights: 0.84 • STRI negatively associated with: • Imports (EBOPS) • Inward FDI • Inward foreign affiliates sales

14. CONCLUSIONS • Restrictions on foreign ownership and commercial establishment in general • Impediments to mode 4 play a non-negligible role • Market access and national treatment measures have a similar significance as domestic regulatory and other measures • The STRI is remarkably robust to alternative weighting schemes and reflects trade restrictiveness