Will Liberalizing the Services Trade between Developing and Developed Countries Solve Employment Problems in a Post-Pandemic Recovery? The Case of ACP-EU Services Trade

The COVID-19 pandemic has exacerbated the asymmetric employment problems in global services sector. Would a liberalization of highly protected trade between rich and poorer countries help solve such problems? This paper contributes to answering that question by analyzing impacts on welfare an hypothetical Africa, Caribbean Pacific Group States (ACP) their partners European Union United Kingdom (EU+UK). For both ACP EU +UK, service sectors play important role economy, especially providing jobs. employ majority unskilled labor large skilled labor. instance, EU+UK, 67% employed 82% workers are sectors; respective figures for 54% 90%. These indicate any change policies sector will affect not just but also other agriculture manufacturing countries. To analyze employment, I use Computable General Equilibrium model takes into account productivity gaps among trading Results show although represents only about 24% ACP’s total exports 28% import from halving bilateral tariffs generate gain 3.4 times larger than under elimination goods. Such significant endowment effects equivalent 410,000 new jobs per year, mostly gains reach sectors, including agriculture, as costs reduced. raise wages, All these increase further if its improves. Despite slight decline wages EU+UK’s labor, EU+UK 7.8 billion USD welfare. Overall, should be delayed.