Catalog

	Table of Contents
p. 20 of 40 BACK | NEXT The WTO Tariff Concessions Non-Discrimination Principles Non-Tariff Barriers to Trade Services Market Access National Treatment Additional Commitments Schedule of Specific Commitments Trade-Related Aspects of Intellectual Property Rights Textiles and Clothing Agriculture Trade Remedies Dispute Settlement System Regional Arrangements WTO Application Process

World Trade Organization Toolkit

---

Services

(a) Introduction

Originally, international trade rules only concerned goods. The negotiation of a specific Agreement on Trade in Services during the Uruguay Round constitutes thus a major development in the history of international trade relations. The General Agreement on Trade in Services (GATS) was developed in response to the huge development of the services' sector during the last decades. Services represent today 60% of the global output, 30% of the global employment and nearly 20% of global trade. The revolution in communication (the internet) has further increased the potential for international trade in services, which made it necessary to address protectionist measures adopted by countries to protect their domestic services.

(b) Structure of the Agreement

The "service" sector is highly complex due to the large number of specific service sectors (indeed, there appears to be more than 150 sectors). Thus, although GATS is modelled on GATT, the special nature of services and their great variety necessitated a less ambitious approach. The only major obligation which members undertake in regard to all services is MFN treatment. The majority of GATS obligations are determined by the commitments that each Member has listed in its Schedule.

GATS is based on four pillars: the first part of the text containing general obligations and disciplines; annexes dealing with rules for specific sectors; individual countries' specific commitments to provide access to their markets, including indications of where countries are temporarily not applying the "most-favoured-nation" principle of non-discrimination; and provisions regarding future negotiations.

(i) General obligations and principles

The Agreement covers all internationally-traded services which are defined through four "modes" of trading services:

• services supplied from one country to another (e.g. international telephone calls), officially known as "cross-border supply";
• consumers from one country making use of a service in another country (e.g. tourism), officially known as "consumption abroad";
• a company from one country setting up subsidiaries or branches to provide services in another country (e.g. a bank from one country setting up operations in another country), officially known as "commercial presence"; and
• individuals travelling from their own country to supply services in another (e.g. an actress or construction worker), officially known as "movement of natural persons".

The GATS lists a series of 15 general obligations and disciplines. The first of these obligations is the MFN treatment. Article II:1 of the GATS states that:

"With respect to any measures covered by this Agreement, each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country."

There are two explicit exceptions to the MFN obligations: the measures existing at the Agreement's entry into force which are listed in the Annex on Article II exemptions and certain frontier measures.

As regards the first of these, each Member has provided a list of the measures for which exemption is claimed. These lists are published by the WTO together with the Schedules of commitments.

The general obligations and disciplines also cover requirements for transparency and the publication of regulations, administration of rules, recognition of foreign certificates, and a number of traditional GATT-type exceptions (safeguard, balance-of-payment measures, and general exceptions).

(ii) Specific commitments

The second portion of the substantive obligations is entitled "specific commitments". It establishes the framework for the schedule of each Member.

Generally speaking, it provides for each Member to undertake specific commitments of three types - market access, national treatment and additional commitments - by entering them in its Schedule.

• Learn more about Market access
• Learn more about National treatment
• Learn more about Additional commitments

The methodology for scheduling of specific commitments is based on the four modes of supply identified in Part I of the GATS:

• cross-border supply;
• consumption abroad;
• commercial presence;
• temporary entry of natural persons.

With respect to each of these modes of supply, parties have made either horizontal commitments (across all sectors) or specific commitments (with respect to a particular sector) or none (in which case the Member lists itself as "unbound" with respect to that mode of supply). Either horizontal or specific commitments with respect to each mode of supply may be subject to conditions and limitations on market access or conditions and qualifications on national treatment.

Specific commitments have been scheduled based upon a classification of activities developed by the GATS Secretariat and based on the United Nations Central Product Classification. Nevertheless, there is no legal obligation that Members use this list.

Learn more about the Schedules of Concessions under the GATS

Back Investment	Next Market Access