Removing Barriers to Services Trade Will Bring Significant Gains

Wednesday, February 04, 2009 

WASHINGTON Although not as high profile as other areas of world trade, removing barriers to services trade will likely lead to lower prices, improved competition and choice for consumers, and improved productivity, according to a new Cato Institute Trade Policy Analysis released today.

In A Service to the Economy: Removing Barriers to Invisible Trade Catos Center for Trade Policy Studies analyst Sallie James points out that an inefficient and inadequate services sector is a de facto tax on production. Because many services are an input to the production of other goods and services, the indirect effects or lowering barriers can be especially pervasive.

According to recent international studies, the global benefits from freeing trade in services would vastly eclipse the gains from liberalizing trade in manufactured and agricultural goods. And, while developing countries have much to gain from opening their services markets to foreign competition, developed countries will gain from
their own reforms.

While American banks, telecommunications, logistics and express delivery firms are world-class, U.S. rail, road, air and maritime transport industries remain protected, with a predictable effect on costs and competitiveness, writes James. While exports of services will likely continue to grow despite the remaining obstacles abroad, American consumers and firms can still benefit from further reforms at home.

Trade Policy Analysis #38:


Sallie James, policy analyst, Cato’s Center for Trade Policy Studies, (202)
789-5264,  ( )
Tanja Stumberger, research associate and editor of, (202) 789-5205,  ( )

The Cato Institute is a nonpartisan public policy research foundation dedicated to broadening policy debate consistent with the traditional American principles of individual liberty, limited government, free markets, and peace.