General Agreement on Trade in Services (GATS


General Agreement on Trade in Services (GATS)
Establishment of GATS: In 1995 under the negotiations
of Uruguay Round.

Reasons for establishment:‡ ‡ ‡ ‡ Due to huge growth of services economy Services account for two third of global output Services Contribute in global employment Contribution of services in global trade

Three elements of GATS
‡ The main text containing general obligations and disciplines ‡ Annexes dealing with rules for specific sectors ‡ Individual countries specific commitments

General Obligations and Disciplines
4 modes of trading services:
‡ Cross-border supply ‡ Consumption abroad ‡ Commercial presence ‡ Presence of natural persons

Most-favoured-nation (MFN) treatment
MFN means treating one s trading partners equally on the principle of non-discrimination. Under GATS, if a country allows foreign competition in a sector, equal opportunities in that sector should be given to service providers from all other WTO members.(This applies even if the country has made no specific commitment to provide foreign companies access to its markets under the WTO.)

Commitments on market access and national treatment
Individual countrys commitments to open markets in specific sectors and how open those markets will be are the outcome of negotiations. ‡ Market access commitment. ‡ market-access limitation. ‡ exception to the national treatment

Publish all relevant laws and regulations, and set up enquiry points within their bureaucracies.

Regulations: objective and reasonable
‡ Governments should regulate services reasonably, objectively and impartially ‡ Commitments to liberalize do not affect Governments right to set levels of quality, safety, or price, or to introduce regulations

When two (or more) Governments have agreements recognizing each other s qualifications (for example, the licensing or certification of service suppliers).

International payments and transfers
‡ Once a government has made a commitment to open a service sector to foreign competition, it must not normally restrict money being transferred out of the country as payment for services supplied ( current transactions ) in that sector ‡ Exception:-Balance-of payments difficulties

Progressive liberalization
Goal is to take the liberalization process further by increasing the level of commitments in schedules

‡ ‡ ‡ ‡

Movement of natural persons. Financial services. Telecommunication. Air transport services.

Institutional Provisions
‡ ‡ ‡ ‡ ‡

Consultation Dispute settlement & enforcement Council for trade in services Technical cooperation Relationship with other international organisations

Further Developments
Negotiations Work on GATS rules Work on domestic regulations MFN exemption Special treatment for least-developed countries ‡ Assessment of trade in services ‡ Air transport services
‡ ‡ ‡ ‡ ‡