Professional Documents
Culture Documents
Structure
1.
Introduction
Background to the GATS Differences between trade in services and trade in goods and their modes of supply and protection.
2.
3.
What is a Service
Service covers a wide range of economic activities and WTO secretariat has categorized this into twelve sectors which are in turn are subdivided 155 subsectors. The twelve sectors include the following: Business (including professional and computer) services Communication services
Goods are tangible and visible while service are mainly intangible and invisible. The economist stated that anything sold in trade that could not be dropped on your foot is a service. There are also differences in modes in which the transactions are carried out. International trade in goods involve physical movement of goods from one country to another for most international service transactions, the time and place of consumption cannot be separated.
Services are traded internationally through one or a combination of the following modes: Mode1: Cross-border supply. Similar to the traditional notion of imports for goods trade. Occurs when a service crosses a national border e.g. the purchase of insurance or computer software by a consumer from a producer located abroad. Mode2: Consumption abroad. Services supplied in the territory of one country to the consumers of another e.g. tourism, education or health services.
and goods is the protection is given by government to domestic industries. GATS rules require that goods be protected by tariffs. As services are normally intangible protection cannot be provided through border measures. Services are normally protected through domestic regulations on FDI, and participation of foreign suppliers to domestic industries.
As indicated above a General Agreement on Trade in services provides basic disciplines and a framework for negotiations on liberalisation of services sectors. The agreement does not define the services but provides that the term service covers any service in any service sectors including their production, distribution, marketing, sales and delivery according to the four modes (Article 1.3). GATS also covers government measures affecting services which are provided on a commercial basis.
Its Provisions apply to all modes in which international trade services takes place, viz. Mode1: Cross-border trade: Trade takes place from the territory of country A into that of B Mode2: Consumption Abroad Services consumed by nationals of a country A in territory of country B. Mode 3: Commercial Presence A service supplier of country A crosses the border to establish and provide a service in country B. Mode 4: Movement of Natural Persons Temporary movement from country A to country B to supply a service.
Service Disciplines
The Agreement has broadly two types of disciplines. One general, applying to all service sectors and second, sectoral commitments i.e. disciplines applying to specific sectors. The general commitments are included in the text of the main Agreement while the specific for sectoral commitments emerge out of the negotiations between countries and are included in countrys schedules of specific commitments. In specific commitments a country may put down terms and limitations and conditions under which services may be allowed to their market.
National Treatment
This is not the same as MFN. National Treatment requires equal treatment for foreign providers and domestic providers. Once a foreign supplier has been allowed to supply a service in ones country there should be no discrimination in treatment between the foreign and domestic providers. The Agreement does not however, as in case of goods, impose this obligation to be applied across the board in all service sectors. It requires countries to indicate in their schedules of concessions the sectors in which and conditions to which such treatment would be extended.
Personnel
Restrictions on foreign personnel Hiring quotas for locals
Instructional resources
Customs restrictions on materials Limits on technical infrastructure
CONCERNS highlighted
MORE PRIVILEGE WITH NO RESPONSIBILITY FOR BIG BUSINESS: GATS is fundamentally about opening up new markets either in new countries or in new areas like water for transnational corporations. As the European Commission website on GATS states, The GATS is not just something that exists between governments. It is first and foremost an instrument for the benefit of business. VAST AND TOO FAST : The GATS negotiations seek to cover too many areas in too short an amount of time. As a result they favor rich countries which have the capacity to deal with rapid and complex negotiations. The speed of the negotiations also prevents genuine public consultation and input. BINDING AND IRREVERSIBLE : GATS effectively locks in all future governments to the agreement, regardless of changes in political outlook, technological advances, or newly available information. Governments have only one chance to stipulate which areas of the sector are not covered by the commitment, and once made, commitments are extremely difficult to reverse. MIRROR OF WTO DYSFUNCTIONALITY : The GATS reflects the many problems of the WTO such as the systematic exclusion of many developing countries perspectives through exclusive and undemocratic negotiating processes;
Concerns cont
Most countries make commitments under GATS with the hope of attracting Foreign Direct Investment. What has been gained from commitments made so far?? In Africa the provision of services goes beyond bringing the services to the people-infrastructure need to be in place
Updates on Doha Round Negotiations Cont Elements of the Chairs Draft Cont:
Indications of possible new commitments might be reflected in next round of revised offers exchanged Some considered that progress in negotiations was satisfactory, others felt it fell short and that services was essential for overall balance in DDA negotiations. Members should to maximum extent possible respond to bilateral and plurilateral requests by offering deeper/wider commitments Such responses, where possible should reflect current levels of market access and national treatment and provide new market access, in particular in sectors and modes of supply of interest to developing countries: mode 1,4 commitments to be commensurate with development levels, regulatory capacity and national policy objectives of individuals Developing countries
Requirement of article (v) of GATS on Regional Trade Agreements which EPAs must conform to if there are to be binding rules. Possibilities of WTO plus rules