Trade in international maritime services: How much does policy matter

Abstract: Maritime transport costs significantly impede international trade. This paper examines why these costs are so high in some countries, and quantifies the importance of two explanations: restrictive trade policies and private anti-competitive practices. We find that both matter but the latter have a greater impact. Trade liberalization and the breakup of private carrier agreements would lead to an average reduction in liner transport prices by one-third and to cost savings of up to $3 billion on goods carried to the US alone. The policy implications are clear: not only is there a need for further liberalization of government policy, but also for strengthened international disciplines on restrictive business practices. We propose an approach to developing such disciplines in the current round of services negotiations at the WTO