This study benchmarks Tunisia against a range of other emerging countries using index measures of services trade barriers derived from the first stage. The index measures are somewhat arbitrary — it is the econometrics in the second stage that establishes the true economic significance of the barriers. However, the index measures bear a monotonic relationship to the tax or productivity equivalent measures, and there are more of the former available than the latter. So for benchmarking purposes, the arbitrariness of the index measures is not a drawback.

# **3. Benchmarking Tunisia on services restrictiveness**

This section benchmarks Tunisia against emerging and high-income countries for which restrictiveness indices, calculated consistently, exist. We consider seven key services sectors — postal services, telecommunications, air passenger transport, the accounting, legal and engineering professions, and banking. Tourism and maritime services sectors, two important sectors in Tunisia, are not covered because they are traditionally open to trade and investment with no significant barriers. One important sector not included is distribution. Entry into the distribution sector is strictly regulated and trading activities, including wholesale distribution and retail trading services, are reserved for enterprises in which Tunisians hold a majority interest. Table 1 shows the importance of the different services sectors in Tunisia’s economy (where the professional services are included in ‘Other business services’ and banking is included in ‘Other financial services’).

As noted, one rich source of index measures is the OECD studies of product market regulation (OECD 2005a, 2005b). Figures 1 to 6 show how Tunisia compares against the worst performing developed and emerging countries in the OECD sample in six key services sectors of interest. The scoring is based on answers to the questions shown in Tables 2-6. The OECD questionnaires collect and score information about a range of regulatory restrictions, but do not distinguish whether the restrictions only affect foreign operators, or also affect domestic players.

Tunisia scores particularly poorly in postal services because it is one of the few countries in the world to retain restrictions on courier services — private operators are required to operate in partnership with Rapid Poste. Tunisia’s restrictions are second only to Turkey’s in telecommunications, largely because it still has a monopoly in fixed line telecommunications and a duopoly in mobile telephony. Its restrictions in air passenger transport are second only to Hungary, because Tunisia has not entered into an open skies agreement with the United States or regionally, because the rates are regulated for domestic aviation, and because the government still retains majority ownership in the largest carrier.

Tunisia also scores relatively poorly in legal and accounting services. Here the OECD questionnaires are largely restricted to measures that are non-discriminatory — for example, exclusive licensing, and restrictions on fees, advertizing and the legal form of business. Tunisia’s range of regulations, particularly on fees, make it second only to Turkey and Italy in restricting competition in accounting, and second only to Greece and Turkey in restricting competition in law. What the OECD index fails to indicate is the strength of Tunisia’s discriminatory restrictions in these professions — foreign firms 5